If you or someone that you know began a side business (or “side hustle”) during the last financial year, you would have to meet the tax obligations that come with that business, along with the tax obligations of your primary business.
All income earned through a side business is taxable income. That means that every sale you make will count towards your taxable turnover (the total business income from your sales) and will need to be declared on your income tax return. Additionally, suppose your turnover exceeds or looks like it will exceed $75, 000. In that case, you’ll have to register for GST and incur the 10% tax that’ll be added onto all of your taxable sales, payable to the ATO every quarter.
If you have to spend money on purchases or expenses that relate to the side business, that spending can be deducted from the profits that you make. Essentially, you only need to pay tax on the difference between your income and your deductions. Here are a few things to keep in mind when claiming a deduction for your business.
Other deductible expenses can happen during the initial startup and structuring of the business. These deductions can include costs that occurred when seeking professional advice on structuring the business, researching the business’s viability or when developing a business plan.
A few items you might be eligible to claim for your side business include:
Always ensure that you claim all business expenses that could apply to your business.
Good record keeping will help track all income and potential deductions that come through via the side business, and employing a bookkeeper could be a means of ensuring that this happens correctly. Remember that accountants are always here to help you during tax return time as well.