You are trading your own if you run your own firm as a lone proprietor or full owner. You should operate and govern the company on your own. As a result, You are legally liable for all parts of the firm, including profits and losses. Because sole traders act on their own, tax is levied at the appropriate individual marginal tax rate. The following are the essential duties you have to lawfully operate as a sole trader and fulfill the necessary taxes requirements in order to file your yearly tax return:
- Tax File Number (TFN) – As a sole trader, you will not need to apply for a separate TFN for your business; you are able to use your personal TFN for business purposes.
- Australian Business Number (ABN) – An ABN is a unique number to identify your business. Every business operating in Australia is required to hold a valid ABN. Without an ABN you are unable to trade, complete tax returns and could face serious penalties.
- Goods and Services Tax (GST) – Once your business generates over $75,000 of revenue, the legal obligation to collect and forward GST to the Australian Taxation Office (ATO) arises. This is managed through yearly, quarterly or monthly Business Activity Statements (BAS) dependant on the characteristics of your business.
- Pay As You Go (PAYG) Instalments- To avoid having to pay a lump sum of tax to the ATO at the end of each financial year, PAYG allows businesses pay their tax liability in instalments. PAYG only applies to your business or investments if they are earning a considerable amount.
- Deductions- General and specific deductions are available to sole traders for expenses that are incurred which are directly attributable to the generation of income. Private expenses cannot be claimed as a tax deduction, however, in certain cases, i.e.- mobile phone that is used for both private and business use; an apportionment of the expense is able to be claimed. The deductions you are entitled to receive may vary if you are deemed to be a Personal Services Individual (PSI).
- Superannuation- As a sole trader, you are responsible for payments made into your superannuation fund, these payments can be deductable on your annual tax return after you inform your superannuation fund.
Tax Accountify Support Here
Having a qualified taxation professional, with an in-depth knowledge of complex tax laws we are helping you minimising your tax liability, or operating in a manner that violates taxation laws, which can lead to the back-payment of tax and significant penalties. Our team of tax consultants are dedicated to legally minimising the tax you pay to ensure the financial viability of your business.
The benefits of choosing us for Sole Trader Tax Returns to prepare your tax return include:
- Realistic advice in language you can understand: We work hard to make sure your taxes are as easy and stress free as possible.
- Save money: We’ll help you maximize deductions and minimize taxes paid. We’ll ensure you are fully aware of your obligations and rights as a tax payer.
- Confidence that your small business tax return is ATO-compliant and won’t attract an ATO audit or reassessment.
- Secure online systems let you upload files and exchange messages safely – fewer meetings, less of your time wasted!.
- Providing a double review on every business tax return we prepare to help maximise refunds and avoid ATO problems.
- Tailoring packages for YOUR small business: You can choose accounting, tax returns, BAS and bookkeeping services… to cut costs, save time and improve accuracy.
- Industry tax specialists in retail, trades, mining, construction, medical and more.