Home – New Forums Starting your journey Starting a business [Second income]

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  • #991589
    Madcat21
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    Hi all,

    A first time poster here

    I’m looking at starting a business consulting service as a sole trader on the side as a second income. I currently work FIFO and would utilise my week off concentrating on the business.

    I have a few questions, if you could shed some light on it would be greatly appreciated.

    – How much tax would I get charged on my second income?
    – I will be working from home, what can I claim? [Internet, mobile phone, electricity etc]

    Is there anything else I need to know or organise?

    Cheers
    Madcat21

    #1182143
    SmallBusiness Accountant
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    Hi Madcat,

    If you are trading as a sole trader, you will need to get an ABN which you can apply by following the link below.

    https://abr.gov.au/For-Business,-Super-funds—Charities/Applying-for-an-ABN/

    If you want to trade using a business name that isn’t your own name, you will need to apply for a business name also. This can be done at the same time when applying for your ABN. I’m not an expert on business names so others on the forum may be able to provide you more details in this regard.

    Regarding income tax, you will get taxed based on the profit that your business makes. Basically, if your income is more than your expenses, then you will get taxed on the difference. The business income gets added to your FIFO income, and as such you will be taxed at your own marginal tax rates.

    If your business on the side was to make a loss, you may be able to use those losses to offset your FIFO income, however special rules apply which you need to satisfy before you can claim those losses. You should refer to the ATO’s “Non-commercial business loss rules”.

    Regarding working from home, if you have a separate home office, you can claim a set rate per hour for electricity of $0.34. You can also apportion your telephone and internet costs between personal use and use in your business. Below is another link which will explains those costs a little further.

    https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Home-office-expenses/

    Hope this helps

    Cheers

    #1182144
    MissSassy
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    Hi Madcat,

    You need to speak to your accountant who can take into account all of your current circumstances to see that you are doing things correctly for your situation.

    #1182145
    Dave Gillen – Former FS Concierge
    Keymaster
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    Hi Madcat,

    It looks like you’re getting some good advice already, so I just want to add a big welcome to the forums. :)

    Good luck with the new biz and we hope to see you around.

    Dave

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