HOW TO PREVENT THAT BIG TAX BILL WHEN YOU'RE SELF-EMPLOYED
This post is for anyone who is self employed, freelancers, contractors, own your own business.
The ATO gives you a few options to pay for your taxes.
You can have that one large payment at the end of the year or you can split your tax payment quarterly. It depends on you how you want to pay but if you are not very good at savings or putting aside money for that end of year tax bill then i suggest paying quarterly to avoid that big 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
1. MAKE QUARTERLY PAYMENTS
If you know you're not a saver, or you don't want to have huge tax bill at the end of the year then opt to make quarterly payments. Quarterly payments helps to keep your business accounts stable and splitting the payments into 4 smaller payments can relief yourself from that extra stress at the end of the year. After all you don't want to be in a position where you can't pay your taxes then have to pay interest on top of your already large tax bill because your late with your payments.
2. SAVE RECIEPTS
Make sure you save all your reciepts that are deductible and related to your business. Saving them in a safe place will save you from the big headache of looking for them at the end of the year. It will also help with time management . Keep it in an itemized folder or scan them all into your computer.
Keep records of everything that you paid for your business throughout the year and the different payments that you receive.
3. STAY ORGANIZED
Use accounting programs like XERO to help you stay organised. Xero is a professional accounting program that helps you record all your expenses, invoices, payments and bills. This program is designed to make your life easier and help you stay organised, the best part of this program is that most accountants use this and they can easily take over your zero account and do all your bookkeeping and accounting for you without wasting time or having to transfer the information to another program.
4. TAKE OUT YOUR DEDUCTIONS
Make sure to always take out your right deductions. If you're a business owner you’re entitled to alot of deductions. A lot of the deductions that a regular employee doesn’t get to file such as car and home office expenses you might be able 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
Business Licences and Permits
Cost of Good sold
Dues and Subscriptions
Gifts Given (professional)
Legal and Professional Fees
Meals and Entertainment
Merchant Processing Fees
Repairs and Maintenance
Any expenses specific to your industry
Contact us at Dolman Bateman or Buildersbooks if you are looking for an experienced accountant or Bookkeeper.
This information is not to be relied upon without speaking to your accountant, tax agent or financial adviser depending on the advice.