The job market has changed significantly over the last two years with many people throwing in their corporate jobs to pursue their own ventures from home. Tens of thousands of Aussies have turned to side gig and contracting work to generate income but are at risk of falling foul of the ATO because they are not operating their activities as a proper business.
We have seen a monumental shift in employment due to the pandemic. A lot of people have lost their jobs or have been forced to cut back on the number of hours they work due to COVID. In addition, a lot of people have loved working from home so much they have decided not to go back to the office.
As a result, we are seeing a significant surge in the number of people taking up a side gig, contracting work and pursuing their own ventures. Effectively, these people are starting up their own businesses and, therefore, should be managing their activities as legitimate businesses.
The Australian Bureau of Statistics reported last year that the number of small businesses jumped by 15.2 percent over the last financial year. This means there are a lot of people at risk of falling foul of the ATO.
There are some basic things you must do if you are running a business or side hustle from home.
Apply for an ABN
For many people who have been employed and are used to having their pay drop into their account every week or month, this is a completely new way of earning money and they have little to no understanding of their accounting and taxation obligations and the associated requirements around setting up and running a business. Like any other business, they need to apply for an ABN.
In addition, they also need to register for GST when their business reaches turnover of $75,000 or more. If you start a new business and expect your turnover to reach $75,000 or more in the first year of operation then you need to register for GST straight away.
Source a good accounts system
Keeping track of your business finances is important. The best way to do this is to sign up to a cloud-based accounts system. Thankfully, many systems such as Xero, QuickBooks or FreshBooks are cloud-based and are really easy to use.
They enable you to easily manage your financials and also upload your receipts as you go via plug-and-play apps like Hubdoc. They also integrate with your bank account and can be easily accessed by your accountant which makes tax time a much simpler and more streamlined process.
Many also have free versions that only require you to start paying once you require certain functionalities.
Find a good bookkeeper
Bookkeeping is one of the most important aspects of starting up a business and bookkeepers are in high demand at the moment.
While people are busily trying to build up their client base and deliver services as a side gigger or contractor, they don’t have time to be focusing on the bookkeeping and accounting side of things. They are going to get themselves into trouble with the ATO.
This is why it is important for anyone who is now working in a side gig or contractor capacity to find themselves a good bookkeeper to ensure they are meeting their obligations and importantly capturing and recording all of their expenses so they can claim them come tax time.
Bookkeeping is an incredibly vital and important profession at any time, but at the moment with so many people in need of bookkeepers, it is also time when work demand is at an all-time high.
As a national firm of accountants and bookkeepers, we help many start-ups and businesses but we also have to assist quite a few that have experienced significant issues with bookkeepers who have not fully understood the complexities of bookkeeping work. It is important to surround yourself with good people when starting a business as it will make the journey so much easier.
