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November 21, 2015 at 11:11 pm #993355Up::0
Hi guys, hoping you can help me out.
Its my first year in business as a sole trader in the construction industry. Still trying to get my head around tax and GST etc so a few questions.
1) As a sole trader do I pay income tax on all income generated by the business or only on the wage I pay myself AFTER I pay bills and expenses i.e. building materials, GST, marketing, car repayments, car insurance, tools etc…
2) I suppose question 1 might answer this but is my tax free threshold on total income or only what I pay myself?
3) Hypothetical Question: Say I make $1000 on a job. I pay $100 GST, I spend $200 on materials, I donate $200 to charity and make $300 car payment (business vehicle obviously) This leaves me with $200 which I take out as a wage. So does only the $200 go towards my taxable income or how does it work exactly.
This is basic stuff I know but all new to me and still learning so be take it easy on me
Thanks guys
November 22, 2015 at 6:39 am #1191165AnonymousGuest- Total posts: 11,464
Up::0Hi Chippy rain,
It’s confusing isn’t it?
In my experience it’s always best to get your accountant to help you sort out all this stuff initially so that you’ve got a robust system to move forward with. If you’re already working with someone for your tax, they should be able to advise you on all this.
If not, I’m sure that the brains trust here will try to point you in the right direction, however please be aware that our resident experts are only able to provide general advice in an environment such as the forum.
Hope you get it all sorted out soon,
JayneNovember 22, 2015 at 6:52 pm #1191166Up::0As a sole trader the profits are your income.
But it not that straight forward. Do you use and accounting program?November 23, 2015 at 3:00 am #1191167Up::0As a sole trader you will pay tax on the profits of your business (when your wage is not counted as a deduction).
In your example, the $200 is your taxable income – pending other deductions, etc.
You should set up an accounting program to help you track your sales, expenses, etc and make it easy for you and your tax accountant at the end of the year.
Here is a thread on cloud bookkeeping software (I provided an overview of the options).
http://www.flyingsolo.com.au/forums/index.php?threads/bookkeeping-which-software.36169/If you need some help, give me a shout.
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