Are you self-employed and want to prevent that big tax bill? Here is how
Updated: Mar 16, 2019
This post is for anyone who is self employed, freelancers, contractors, and owners of business.
The ATO gives you a few options to pay for your taxes.
You could opt for that bulk end of year payment or you could decide to proceed by paying your tax quarterly. It all depends on how you want to pay really, but then again, not everyone is good at saving, therefore if you fall in such a category of persons, it is highly advisable paying quarterly to avoid that big end of year tax bill.
Due dates for quarterly installments – for most taxpayers
Due Date - 28 October
Due Date - 28 February
Period - January–March
Due Date - 28 April
Period - April–June
Due Date - 28 July
Here are some steps you should take
1. Make Quarterly Payments
It would always come as a great set back if at the end of the year, a huge tax bill comes, and you can’t pay. Knowledge of who you are is one of the greatest assets anyone could have in the quest for success, so if you are aware of the fact that you’re not a good saver, it’s better to opt for quarterly payments. Quarterly payments help keep your business accounts stable and splitting the payments into 4 smaller payments can relief yourself from the possible stress at the end of the year. Moreover the dangerous situation of accrued taxes plus interest would never befall you.
2. Save Receipts
To ensure time management and avoid the uncalled for headache of searching for your receipts at the end of the year, you have to save all your receipts that are deductible and related to your business. You could keep them in an itemized folder, or scan them all into your computer. Keep the records of everything you paid or received in relation to your business throughout the year.
3. Stay Organised
There is this professional accounting program that helps you record all your expenses, invoices, bills and payments called Xero. Why not use such a program(s) to help you stay organised; Xero is a program designed to make your life easier and equally help you stay organised. Moreover an amazing thing about this program is that most accountants use it, and they can easily take over your Xero account and do all your bookkeeping and accounting for you, without wasting time or transferring the information to another program.
4. Take Out Your Deductions
Make sure to take out your right deductions. As a business owner you’re entitled to a lot of deductions; a lot of the deductions that a regular employee doesn’t get to file such as car and home expenses, you would be entitled to put down as your deductions and possibly get more money back or own less.
Here are a few deductions you can have if you are self employed.
• Advertising and Promotion
• Vehicle Expenses
• Bank Fees
• Business Licenses and Permits
• Cost of Good sold
• Dues and Subscriptions
• Equipment Rental
• Gifts Given (professional)
• Home Office
• Interest Expense
• Legal and Professional Fees
• Meals and Entertainment
• Merchant Processing Fees
• Office Expenses
• Repairs and Maintenance
• Any, expenses specific to your industry.
Contact us today if you have any questions.
*This information is not to be relied upon without speaking to your finance broker, tax agent or financial adviser.