Home Forums Starting your journey Tax help for sole trader!!!!

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  • #991423
    Poolz
    Member
    • Total posts: 6

    Hi guys, I have recently just registered my business and am looking to seek some info on my first year of trading! I have heard on your first year you get taxed at the end of your first financial year? Can anyone shed some light on this matter? Also how much of a sale would you recommend to put away to cover your taxes?

    So as I started trading this month can someone tell me when I have to pay my tax installment and also how much either being a % of a sale? Any other information or tips please feel free!

    Cheers guys!

    #1181474
    ThexArm
    Member
    • Total posts: 253

    Hi,

    Welcome to forum and congratulations on starting your business.

    There are 2 taxes you need to be aware of.. namely GST and Income Tax.

    Since your is a new business, you are not required to register for GST until your sales revenue reaches $75k in a year. But, you can voluntarily register for GST. If you choose not to register then you can not charge GST on your services and also you can not claim GST on your expenses. If you do choose to register for GST then you can charge GST and claim GST on your expenses. By registering for GST, you will have another responsibility of submitting BAS on a periodic basis to the ATO.

    Income tax is payable at the end of the year on your total taxable income. It would be good idea to consult an accountant to get professional advise on this. Generally, if you keep around 30 to 35% of your revenue aside for this tax would be good.

    #1181475
    Poolz
    Member
    • Total posts: 6

    Thank you for your help! I have not register for GST and understand that tax. It was just the income tax which threw me a bit! So let’s say I buy a product off a supplier for $100 and sell for $200. Do I only pay tax on the profitable amount or for the whole sale of $200? Just so I know what to work my percentage out on!

    Cheers

    #1181476
    ThexArm
    Member
    • Total posts: 253

    No problem.

    Only on the profit. That is why I have used the term taxable income. Taxable income means all your income minus allowable expenses (as per taxman) including cost of goods.

    #1181477
    Jason@Plumsale
    Member
    • Total posts: 155
    ThexArm, post: 211689 wrote:
    you are not required to register for GST until your sales revenue reaches $75k in a year.
    Just to clarify some more, the rules for when to apply for GST is not based on financial years but any 12 month period. So if you anticipate that over the next 12 months you will reach $75K in revenue (ie sales not profit) you must register now. Do not wait until you reach $75K.

    The income tax you pay is really no different to your personal tax, ie take all the money you earn’t as a sole trader, remove the deductions(expenses) what is left is your taxable income. If you have a look at the ATO they have calculators to work out how much tax you will pay.

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