Home – New Forums Starting your journey The Advantages of Flying Solo and the TAX man.

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  • #968292
    BaM
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    Hello fellow Micro Bussiness Owners.

    I’ve been flying Solo for 2 years now.
    Loving the Work / Lifestyle relationship I am in right now.
    As I’m sure many of you share the same sentiment.

    After speaking with another member about software, I had a question.
    My Question is this:
    Q: What was YOUR biggest advantage in using the Taxation system in relation to your business?

    If this topic has been covered before, I apologise, as I am relatively new to this forum. However I feel that we can be utilising our situation much more effectively. I think it would be a valuable discussion for some and hopefully an “Ahaaaaaa” moment for me.

    You don’t need to go into specifics, nor divulge any financial aspects of your business. Basically I want to know the “Questions” I should be posing to my accountant? I understand there are many differing sectors to Taxation.

    I am in the Graphic Design / Advertising field.

    Many thanks in advance Dan.

    #1032230
    WAHM
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    The deductions in able to claim part of your rent for use as “your office”

    #1032231
    BaM
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    Thanks WAHM.
    Are you saying, if you were working from home you can claim
    Rent, electricity, phone bills etc?

    Or are you saying something different?

    #1032232
    Jessica Somerville
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    Hi Dan.

    That’s correct. Calculate the % of your office floor space compared to your entire home and apply that % to your electricity costs etc.

    Regards
    Jessica
    Jessica Virtual Assistant
    http://www.jessicavirtualassistant.com.au

    #1032233
    Farid Zaki
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    BaM, post: 38677 wrote:
    Basically I want to know the “Questions” I should be posing to my accountant?

    Hi Dan,

    Check out this link about “103 Questions to ask your Accountant” :

    http://www.atpaccounting.com.au/site/wp-content/uploads/atp-103q-low3.pdf

    I hope that helps.

    #1032234
    Business Coach
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    Sole trader’s and Tax compliance

    The best advantage of Tax compliance is the fact you wont get fined.

    An important aspect of being a sole trader regarding tax is knowing what your tax categories are when forecasting revenues and expenses for the year to manage your tax obligations better.

    Because of the variation in scales of tax rates you really need to know exactly where your cash flow is at and put aside enough money to cover your potential tax obligations.

    #1032235
    BaM
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    Thanks Business Coach.

    And, yes I am putting away 25% (higher than most) of the bills invoiced for BAS (GST) and for Income Tax. No problem there.

    I also know about turning your home into your office, however I was told that when you sell your home, you will have to pay capital gains tax on the property as it is viewed as a commercial entity.
    So they still get you in the end.

    I was just after a few Case Histories of members that they may have done in the past which could also help?

    I know about car levies with fuel consumption, to and from client meetings, keeping receipts for books purchased, partial phone bills, depreciating computer equipment etc.

    I do all of that, I just feel as there is something I might be missing.
    As sole business owners we face difficulties getting loans, because Banks usually like to see a constant income stream. So where are our loop holes?

    Kerri Packer once said “All Australians should do everything within their power to minimise their Tax”. I agree with that statement completely.

    I just feel as though I’m missing a loop hole somewhere.
    Or I may need to hire a team of accountants like the Packers.
    They’d certainly make up for it.
    Rather than give it to Tax or the Super profit tax.

    Thanks for the replies.
    Dan.

    #1032236
    YoungNomad
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    LOL – buying a Ferrari, customising it, and claiming it all as a tax deduction.

    Doesn’t get much better than that!

    Oh, apart from flying business class to London next week as a tax deduction.

    AUSTRALIA IS AWESOME!

    #1032237
    YoungNomad
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    BaM, post: 38759 wrote:
    I do all of that, I just feel as there is something I might be missing.
    As sole business owners we face difficulties getting loans, because Banks usually like to see a constant income stream. So where are our loop holes?
    Dan.

    The issue you will run into in your first 2 years is your lack of tax returns to provide.

    Lenders love 2 years strong financials.

    If you cannot provide this, you have to pursue Low Doc loans (genearlly 80% max). The first 6 IP’s I bought, I had to front up 20% PLUS stamp duty (around 100k). It gets very prohibitive on a cash flow point of view.

    #1032238
    MattR
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    Consider the Small Business Entity Concessions, such as

    – Pooling, a 15% and 30% write off of assets
    – 100% write off assets <$1000 (soon to be $5000 from the Federal Budget - watch this space)
    – stock control adjustments of <$5000 don't need to be reported
    – Entrepenuers Tax Offset (better for services rather that trading stock businesses)
    – CGT Concessions

    With respect to Home Office,this is far different than a Home Office that also happens to be a Place of Business. The latter will incur CGT.

    Ferrari = Luxury Car Limits on depreciation and other limitations.

    #1032239
    BaM
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    Thanks for the Messages Members.

    TAX is one of those topics that nobody really wants to talk about as it is considered a Dry or Boring, however it is Vitally important to each and every one of us, as we are all governed by it.

    Thanks for the suggestions.

    I’m not so sure about the Ferrari as a TAX write off.
    I’m sure it has been tried before. LOL.

    “We owe the invention of progressive taxation to Karl Marx”.
    (Who wrote the Communist Manifesto). Comment by ‘Ronald Regan’.

    #1032240
    DS_BVS
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    Hi Bam,

    The way the revenue is spent can be annoying if you are paying tax, but consider treating taxation like another business expense you have to meet. Like any of your operating expenses you obviously minimize it within the law, but then pay it and move on.

    I have observed many more businesses creating cash flow issues for themselves by spending money to minimize tax than simply paying tax on their true profit. This particularly applies to capital expenditure where they lock themselves in for periods longer than the current tax year and don’t get complete deductions in the year of expenditure.

    Even if your tax rate is say 30%, reverse it and say well I’m keeping 70% and so on through the various marginal rates.

    Good luck.

    DS_BVS
    http://www.businessvision.com.au

    #1032241
    Deduct Your Home
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    “Q: What was YOUR biggest advantage in using the Taxation system in relation to your business? Many thanks in advance Dan”.

    Hi Dan, I realise this is an older post but I think I’m not too late to be of some help here!

    The biggest advantage on offer is the ability to fund a far more significant proportion of the purchase, extension or upgrade of your home in pre-tax dollars, than most people know is possible PLUS; that you will not necessaily pay any capital gains tax at sale if you follow the rules and use your head.

    My company has created ATO scrutinised IP that specialises in this exact niche’.

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