Side gigs and contracting work are increasingly attractive to tens of thousands of Australians as a means of generating an income. The flexibility this approach offers, allied to difficulties in finding full-time, salaried positions, make this a boom sector. It does not come without risks, however, with many people falling under the scrutiny of the ATO because they are not operating their activities as a proper business.
“A lot of people have lost their jobs over the last 12 months or have been forced to cut back on the number of hours they work due to COVID,” Coco Hou, CPA and managing director of Platinum Accounting Australia and Platinum Professional Training, said.
“As a result, we are seeing a significant surge in the number of people taking upside gig and contracting work. Effectively, these people are starting up their own businesses and therefore should be managing their activities as legitimate businesses.”
Hou warns that side gigging is a completely new way of earning money for many, who have little to no understanding of their accounting and taxation obligations and the associated requirements around setting up and running a business.
She advised side-giggers to apply for an ABN, as well as to register for GST once their business reaches a turnover of $75,000 or more. Businesses expecting a turnover to reach $75,000 or more in the first year of operation are advised to register for GST straight away.
“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,” Hou explained. “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,” Hou concluded.