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  • #964982
    skyenat
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    I am beginning to do some private design work (other than my full-time job) so am going about setting up my own small business. I have registered and obtained my ABN and wondered if someone would be able to advise me on the best approach tax-wise in terms of purchasing items as part of my start up costs.

    I am looking at purchasing a laptop (approx $2000) and wondered if I am best buying it outright and claiming it or signing a laptop lease agreement? Also, can I claim it as upfront start-up costs or do I need to have earned money under that ABN first before claiming? Will a lease agreement affect with detriment, my future application for a mortgage (maybe within the next 6-12 months)?

    Is there any other advice you can offer, or anything else I should be aware of in terms of tax issues for a small business start-up?

    Thankyou

    Natasha

    #1009426
    luminol
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    skyenat, post: 8947 wrote:
    I am beginning to do some private design work (other than my full-time job) so am going about setting up my own small business. I have registered and obtained my ABN and wondered if someone would be able to advise me on the best approach tax-wise in terms of purchasing items as part of my start up costs.

    Also, can I claim it as upfront start-up costs or do I need to have earned money under that ABN first before claiming?

    I’ve been trying to register and activate an account for the past 3 hours to pretty much ask the same question!

    If it means anything, there’s now two of us hoping to get the answer!

    – Jonathon

    #1009427
    Warren Cottis
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    Hi Natasha

    Here are your answers… (You said)I am looking at purchasing a laptop (approx $2000) and wondered if I am best buying it outright and claiming it or signing a laptop lease agreement?

    {Answer: both methods are tax deductible but with leasing you claim the payments as you make them but with the outright purchase you depreciate (write off) the total price over two and half years approx. In the end it all washes out as tax deductible if the expense is incurred in gaining or producing assessable income… so for you its more about whether you have the $2k and spend all of your cash reserves… in which case renting/leasing might be better} (You said) Also, can I claim it as upfront start-up costs or do I need to have earned money under that ABN first before claiming? {Answer: you can claim costs of gaining or producing assessable income even if you have not been successful generally speaking… however there are some other rules as the ATO wants to see whether you are serious about what you are doing or just on a whim} (You said) Will a lease agreement affect with detriment, my future application for a mortgage (maybe within the next 6-12 months)? {Generally speaking no… the $2k lease is so small that the lending bodies would be unlikely to exchange information unless you default}

    Is there any other advice you can offer, or anything else I should be aware of in terms of tax issues for a small business start-up? {Not tax issues but if you are looking to build a design business you might want to have a look at our business opportunity}

    #1009428
    Warren Cottis
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    oops… I just saw another post where you say you are an interior designer … I thought you meant web or graphic design… hence my biz opp comment

    #1009429
    skyenat
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    Thankyou so much for the info – thats very helpful!

    #1009430
    KoB
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    http://www.flyingsolo.com.au/forums/money-matters/791-how-governments-stimulus-package-can-assist-your-small-business.html

    Hi skyenat,

    Maybe look at this thread above and see if it helps with your decision.

    I am also curious what expenses are start ups and what should be included
    in P&L……can anyone help?

    Kob
    http://www.mygoodolddog.com

    #1009431
    Warren Cottis
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    KoB, post: 9027 wrote:
    http://www.flyingsolo.com.au/forums/money-matters/791-how-governments-stimulus-package-can-assist-your-small-business.html

    Hi skyenat,

    Maybe look at this thread above and see if it helps with your decision.

    I am also curious what expenses are start ups and what should be included
    in P&L……can anyone help?

    Kob
    http://www.mygoodolddog.com

    All expenses by nature go to P&L… if you have a start up cost that gives you some special intellectual knowledge or licence (for example) or is the purchase of equipment then they go to your balance sheet and are not written off (expensed) to P&L immediately

    #1009432
    KoB
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    warrenc, post: 9042 wrote:
    All expenses by nature go to P&L… if you have a start up cost that gives you some special intellectual knowledge or licence (for example) or is the purchase of equipment then they go to your balance sheet and are not written off (expensed) to P&L immediately

    If an item is less than a certain amount, it can be “written off”/fully claimable immediately instead of amortising/depreciating over a number of years?

    KoB
    http://www.mygoodolddog.com

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