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THE BUSINESS BIBLE: Setting Up Your Small Business Books · She's On The Money

0:00
Speaker 1: Hello, my name's Santasha Nabananga Bamblet. I'm a proud yr
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Speaker 1: the Order KERNI Whoalbury and a waddery woman. And before
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Speaker 1: we get started on She's on the Money podcast, I
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Speaker 1: would like to acknowledge the traditional custodians of the land
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Speaker 1: of which this podcast is recorded on a wondery country,
0:18
Speaker 1: acknowledging the elders, the ancestors and the next generation coming
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Speaker 1: through as this podcast is about connecting, empowering, knowledge sharing
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Speaker 1: and the storytelling of you to make a difference for
0:30
Speaker 1: today and lasting impact for tomorrow.
0:33
Speaker 2: Let's get into it. She's on the Money, She's on
0:37
Speaker 2: the Money. Hello, and welcome back to the Business Bible.
1:01
Speaker 2: I am Victoria Devine, the owner of several successful businesses.
1:04
Speaker 2: It's not gonna get less weird saying that, is it?
1:07
Speaker 2: Jess and I am joined by one of the hardest
1:10
Speaker 2: working side hustlers I know, Miss jessic ricci Ah.
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Speaker 3: How kind, very exciting, nice lady. You are a very
1:17
Speaker 3: nice lady. Pumped in into episode two of the Business Bible.
1:20
Speaker 2: I am also very excited because today is arguably one
1:25
Speaker 2: of these sexiest topics. Jessica, we could talk about we're
1:28
Speaker 2: going to set up your small business books.
1:29
Speaker 3: Jessica, I feel like you're using the term sexy very loosely.
1:34
Speaker 2: Oh no, no, I think it's really sexy. Today we are
1:36
Speaker 2: talking tax we're talking avns and bank accounts. Was that
1:42
Speaker 2: sexy talk? Don'ty to me? Tell me more. In all seriousness, though, Jesse,
1:46
Speaker 2: this is the one thing that I hop on and
1:48
Speaker 2: on and on to people saying I'm going to start
1:50
Speaker 2: a small business or I've got a small business. Please
1:52
Speaker 2: set up your books properly from the very beginning, to
1:55
Speaker 2: ensure that everything runs smoothly and we don't get into
1:58
Speaker 2: any trouble with the ATO, because there is honestly nothing
2:01
Speaker 2: less sexy than having the ATO knocking on your door,
2:04
Speaker 2: right Like it's the one thing that I just go, No,
2:08
Speaker 2: just go and get another bank account, Just go and
2:11
Speaker 2: set it up separately, get an ABN. Stop underestimating the
2:15
Speaker 2: power of your business, like yeah, you would hear it
2:18
Speaker 2: all the time where people are like, oh no, I
2:19
Speaker 2: can't be bothered, Like I don't do that much work,
2:21
Speaker 2: Like you could just be an influencer on the side,
2:23
Speaker 2: you know, making a couple of hundred dollars, or you
2:26
Speaker 2: could you know, have like and I always use a
2:28
Speaker 2: candle business because I kind of like feel like that's scalable.
2:31
Speaker 2: It could be as big as glass house or like
2:33
Speaker 2: a coyer or something, or it could just be something
2:35
Speaker 2: that you like spend sundays like pouring candles because you
2:38
Speaker 2: really like it and sell them to friends and family. Yeah,
2:41
Speaker 2: but it's one of those businesses where you might go,
2:43
Speaker 2: it's not worth it. No, it is worth it. And
2:45
Speaker 2: the second you say it's not worth it, you're not
2:47
Speaker 2: believing in your business. And so having set up books
2:50
Speaker 2: is going to be the stable foundation of making sure
2:53
Speaker 2: that your business is successful, which Jessica is very sexy.
2:57
Speaker 3: That does sound very sexy to me. I think it's
2:59
Speaker 3: probably confusing to a lot of people, which is why
3:01
Speaker 3: they don't often do it properly. But as someone who
3:04
Speaker 3: has kind of been through it, I think there is
3:06
Speaker 3: nothing worse than getting to tax time and being like,
3:08
Speaker 3: oh my god, everything's everywhere. So if you set it
3:11
Speaker 3: up now, you're saving yourself all of that stress in
3:14
Speaker 3: six or twelve months time.
3:15
Speaker 2: And you too will agree that it is very sexy. Promised,
3:19
Speaker 2: I promise. And it can be super complicated, right, so
3:23
Speaker 2: we'll try and make it as easy and clean as
3:25
Speaker 2: possible today, starting with getting an ABN. Jessica, you have one,
3:30
Speaker 2: I do a big dog. And ABN is what is
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Speaker 2: called an Australian business number, which is a unique number
3:36
Speaker 2: that identifies your business to the government and also to
3:39
Speaker 2: your consumers. It's absolutely necessary for tax purposes, for invoicing
3:44
Speaker 2: and at times for your banking.
3:47
Speaker 3: Okay, I have an ABM because I got one as
3:49
Speaker 3: a kid, because I modeled for Target.
3:51
Speaker 2: Once I modeled for Target one. Yeah, I was in
3:53
Speaker 2: a big post to my mum. Tried to take it home.
3:54
Speaker 2: They wouldn't let it, so I actually would let it.
3:57
Speaker 2: I mean, just who is this crazy woman? Please get
4:01
Speaker 2: act O get out of the kid section. That's very fair.
4:05
Speaker 3: But I had one set up and I think I
4:06
Speaker 3: just had to renew it. I didn't actually start from scratch.
4:08
Speaker 3: So tell me a little bit more, Okay.
4:10
Speaker 2: So it is really important because when we actually talk
4:13
Speaker 2: about an ABN, it's not as simple as just like
4:15
Speaker 2: trotting down the road and picking up your ABN. I mean,
4:18
Speaker 2: it is that simple online you just apply for it,
4:20
Speaker 2: but there are actually several different options when signing up
4:23
Speaker 2: for an ABN. Yah, and I feel like lots of
4:25
Speaker 2: people get analysis paralysis. So let's go through the three
4:28
Speaker 2: main types today. So the first is not having an
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Speaker 2: ABN at all, so no bueno. This is when you
4:33
Speaker 2: choose not to register your business with the government, and
4:36
Speaker 2: this is only for small businesses that turn over less
4:39
Speaker 2: than seventy five thousand dollars per financial year, so it
4:43
Speaker 2: means that you're kind of functioning under your personal name completely.
4:46
Speaker 2: It's perfect for side hustles or if you want to
4:48
Speaker 2: make a bit of money on the side and you
4:50
Speaker 2: aren't expecting the business to grow and you don't really
4:52
Speaker 2: want it to grow. You're just like, oh, I did
4:54
Speaker 2: some gardening, and you know, one year, I just was
4:57
Speaker 2: like trying to smash down debts, and so I offered
5:00
Speaker 2: my gardening services for you know, the period over Christmas,
5:03
Speaker 2: and I'll never do it again. But I did accept
5:05
Speaker 2: business income, and obviously I wanted to make sure that
5:08
Speaker 2: that was all clean and I paid tax on it
5:09
Speaker 2: and stuff. So that could be a good example. You
5:12
Speaker 2: might also be, as I said before, a mini influencer
5:15
Speaker 2: doing a few brand deals here or there, or maybe
5:17
Speaker 2: you're like side hustling as much as Jess does, and
5:20
Speaker 2: you're renting your clothes out on the side, So you
5:22
Speaker 2: might have like a few dresses listed on the vault
5:24
Speaker 2: or something that is not a hobby that is actually
5:28
Speaker 2: something that you need to pay tax on it. And
5:30
Speaker 2: I think there are a lot of people who are
5:32
Speaker 2: quite flexible about tax. I'm not one of those people
5:36
Speaker 2: because I'm kind of like, do it right, do it once,
5:38
Speaker 2: don't get in trouble, full stop, end of story. Whereas
5:41
Speaker 2: I have heard historically people go, oh, well, it could
5:44
Speaker 2: fall under being a hobby if you're earning less than
5:47
Speaker 2: five thousand dollars a year from it. And I look
5:50
Speaker 2: at that and I just go, yeah, but like, you're
5:52
Speaker 2: trying to generate additional income. It's not like I just
5:55
Speaker 2: sold a chest of draws on Facebook market plass once off,
5:58
Speaker 2: Like you fully set up this like business structure online
6:03
Speaker 2: to generate income from your wardrobe. Yeah, And so like
6:05
Speaker 2: I'm a little bit more cut and dry, and I go, no,
6:08
Speaker 2: you definitely need to be doing tax on that. But
6:10
Speaker 2: the important thing there is talk to your accountant if
6:12
Speaker 2: you're worried, because obviously I can't give you personal advice,
6:15
Speaker 2: but essentially you could just be selling some goods that
6:18
Speaker 2: you create yourself knowing that it's just never going to
6:20
Speaker 2: exceed seventy five thousand dollars a year, so like it's
6:23
Speaker 2: kind of, you know, the gateway to having an ABN. Yeah.
6:27
Speaker 3: Interesting addendum. If you're providing a service to somebody, and
6:31
Speaker 3: I only know this because it happens to me once,
6:33
Speaker 3: if you do not have an ADM, often the company
6:37
Speaker 3: or the person paying you will withhold the highest tax rate.
6:42
Speaker 3: Like typically you would be taxed at your marginal tax rates.
6:45
Speaker 3: So for example, if you were being taxed, it is
6:46
Speaker 3: it twenty three twenty four?
6:48
Speaker 2: What's the thirty two and a half percent?
6:50
Speaker 1: Oh?
6:51
Speaker 2: Really tax rate? I would like to swap it to
6:53
Speaker 2: twenty three. You've just like flipped. It's just not wrong,
6:57
Speaker 2: just a little on the wrong side of the tracks. Yeah,
7:00
Speaker 2: like to do that. Yeah, we could drop it, im
7:01
Speaker 2: me up to that.
7:03
Speaker 3: If you were earning under the threshold, your business income
7:06
Speaker 3: would be taxed if you were trading at like that
7:09
Speaker 3: same tax, right, But if you're supplying to somebody else,
7:12
Speaker 3: they will often withhold the top rate of tax, so
7:16
Speaker 3: it might be high, so you end up paying more
7:17
Speaker 3: tax than you would.
7:20
Speaker 2: It came a little bit complicated, but also good to
7:23
Speaker 2: know keeping tip it on the side because not having
7:26
Speaker 2: an ABN, obviously you kind of go, oh, well, I'm
7:29
Speaker 2: never gonna make more than ten grand from this little
7:31
Speaker 2: side hustle. However, it also leaves you open legally to
7:36
Speaker 2: a lot of like impact, if that makes sense. So
7:39
Speaker 2: you know, if something happens, just your butt's on the line. Yeah,
7:43
Speaker 2: like it's you personally, and I just go oh, like,
7:46
Speaker 2: if I'm starting to provide a product or a service,
7:48
Speaker 2: like I want some level of protection, and also I
7:52
Speaker 2: just like things to be quite clean. Even if you
7:55
Speaker 2: don't have an ABN, I would still be looking at
7:57
Speaker 2: having your own bank accounts and making sure that your
8:00
Speaker 2: business income is separate from your personal income, just to
8:03
Speaker 2: make things easy for you. So don't think that you're
8:06
Speaker 2: going to get out of me giving you a sexy
8:08
Speaker 2: banking structure just because you go no ABN, no worries. Yes,
8:11
Speaker 2: no ABN, more worries, more worries, more worries. Tell me
8:15
Speaker 2: about the next category, which is actually the one that
8:16
Speaker 2: I fall into. Okay, So this is sole trader. So
8:19
Speaker 2: this is for a business of one person or someone
8:22
Speaker 2: likely to pay for contractors or freelancers. So look at
8:26
Speaker 2: the future of your business. Do you see it just
8:28
Speaker 2: being you? Are you just always going to freelance? This
8:31
Speaker 2: option is free, sexy, and can be done through the
8:34
Speaker 2: ATO website and only through the ATO website, And it
8:37
Speaker 2: can be done really quickly and easily. When you're googling
8:41
Speaker 2: set up ABN. Please do not clip any of the
8:44
Speaker 2: links that are like this proversion will help you. No,
8:47
Speaker 2: don't do it. It's really easy. It's really easy, and
8:51
Speaker 2: it's free to do. Don't pay some plub who's trying
8:54
Speaker 2: to scare you. Really literally take advantage of you. Also
8:58
Speaker 2: on that every year, Yes, I get multiple of these
9:01
Speaker 2: letters in the mail from people going your ABN's up
9:03
Speaker 2: for renewble or something of the like. Reader, Is it
9:07
Speaker 2: from the ATO. If not, it's a random marketing company
9:10
Speaker 2: who has searched your ABN on the ABN website. My
9:14
Speaker 2: address is on there, like my business address, like so
9:17
Speaker 2: that people can contact me. That's how business works. But
9:20
Speaker 2: they send a little marketing email that looks like an invoice, ah,
9:24
Speaker 2: and they go just you know, scam this QR code
9:27
Speaker 2: and pay us and we'll get it all sorted out
9:29
Speaker 2: for you. That's awful. Yes, it is a trap. It
9:32
Speaker 2: is a scam. Oh my god. So we only talk
9:34
Speaker 2: one on one with the ATO. There will never be
9:36
Speaker 2: a third party unless it is your nominated third representative,
9:40
Speaker 2: which will probably be your accountant. So if it is
9:43
Speaker 2: not coming directly from the ATO, and it is, you know,
9:47
Speaker 2: from another company, run yeah, run because they're scary. But
9:51
Speaker 2: just you're a soul trader. Why did you pick sole
9:54
Speaker 2: trader for your personal circumstances and not just having no
9:58
Speaker 2: abn oh.
9:59
Speaker 3: I think think it was kind of I was invoicing
10:02
Speaker 3: companies and they were kind of going, where's your abien,
10:04
Speaker 3: And I was like.
10:05
Speaker 2: I don't have one for you to put into your system,
10:07
Speaker 2: and so you.
10:08
Speaker 3: Have a look and a lot of the times companies
10:09
Speaker 3: do need them to set up like purchase orders and
10:11
Speaker 3: things on their end, and that was when I was like, oh,
10:13
Speaker 3: I need to renew the one. And thankfully I had
10:14
Speaker 3: one that was existing.
10:16
Speaker 2: And that's just as easy to renew as it is
10:17
Speaker 2: to set up. Honestly, you just need some identification. Yeah,
10:20
Speaker 2: let the government know what the purpose of the business is.
10:22
Speaker 2: And hits admit like, it's so easy.
10:24
Speaker 3: It was so easy, and I think it also made
10:26
Speaker 3: me feel a little bit legitimate too.
10:28
Speaker 2: Like she's got an ABN on her invoice.
10:30
Speaker 3: Yeah, Like I felt like a proper person that was
10:33
Speaker 3: actually trading goods and services, you know. I felt like
10:35
Speaker 3: it just made me a little bit more legit, which
10:37
Speaker 3: might be silly.
10:38
Speaker 2: But no, no, no, no, I think it's really important to
10:41
Speaker 2: feel legit when you're doing your business as well. I
10:43
Speaker 2: know it can be you know, a little bit fluffy
10:45
Speaker 2: because people will go, well, you know, if one person
10:47
Speaker 2: ends ten thousand dollars with no ABN, and you're saying
10:50
Speaker 2: that having an ABN, I'm still just going to earn
10:52
Speaker 2: the same amount doing the same thing, you might go, well,
10:55
Speaker 2: what's the point. Yeah, the point can sometimes honestly be legitimacy.
10:59
Speaker 2: As somebody who who hires a lot of freelancers and
11:02
Speaker 2: sole traders to do like you know, random content. Sometimes
11:04
Speaker 2: sometimes we'll do events. I want you to have an
11:07
Speaker 2: ABN because protects me. It means that I am, you know,
11:11
Speaker 2: paying an invoice directly to an actual business that can
11:14
Speaker 2: be traced. Everything's clean. Yeah, And so I prefer to
11:17
Speaker 2: work that way. So often it could actually be the
11:20
Speaker 2: difference between you being picked and another sole trader being picked.
11:24
Speaker 2: So I think that it's important to just set it
11:26
Speaker 2: up to make it as easy as possible for your
11:28
Speaker 2: consumers and your clients as well, because the less friction
11:32
Speaker 2: during that process, promise, the more money will come in
11:35
Speaker 2: your door. Yeah, one hundred. There is a third. There
11:38
Speaker 2: is a third, and that's what I have. I have
11:40
Speaker 2: a company set up, So a company is a legal
11:43
Speaker 2: entity in its own right, unlike a soul trader, So
11:46
Speaker 2: there's a bit of protection for you and your personal assets,
11:50
Speaker 2: obviously having a business in between them, which to me
11:53
Speaker 2: sexy because I didn't work this hard to you know,
11:57
Speaker 2: have something happen in the future. Obviously, like open and
12:00
Speaker 2: honest about it. It's not like I'm worried that something's
12:03
Speaker 2: going to happen. But I don't really want my house
12:06
Speaker 2: to be at risk when I've got a company, like
12:08
Speaker 2: you know, if you're earning ten thousand dollars from a
12:10
Speaker 2: side hustle, that to me is quite different to my
12:12
Speaker 2: entire livelihood being at risk. And like I'm responsible for
12:16
Speaker 2: a lot of people's incomes. Yeah, so I just want
12:19
Speaker 2: that protected. The buffer. I'm sure Jess, you feel a
12:21
Speaker 2: lot more protected knowing that there's a business structure there,
12:24
Speaker 2: there's something legit set up. The only way to employ
12:27
Speaker 2: full time, part time or casual stuff is to have
12:30
Speaker 2: a registered company. So you can't just be a sole
12:32
Speaker 2: trader and hire someone. You actually have to set up
12:35
Speaker 2: your entire business structure differently to hire your first employee, which,
12:39
Speaker 2: if you're looking at it, you know, in your circumstance,
12:42
Speaker 2: just I doubt you're ever going to hire an employee
12:44
Speaker 2: because of the way that you work and what your
12:46
Speaker 2: plans are. But like what if you were like, oh, actually,
12:50
Speaker 2: I want to take content creation full time. Like I'm
12:53
Speaker 2: going to take this really legit. One day, my personal
12:56
Speaker 2: income is going to outweigh the amount of income that
12:59
Speaker 2: I make in my full time job, and I'm going
13:00
Speaker 2: to quit. Yeah that's exciting. What happens when you quit, Jess,
13:04
Speaker 2: you might need to hire a personal assistant, you know, legit.
13:08
Speaker 2: If you've taken this full time, you might want to
13:11
Speaker 2: expand and have that support, So you need to think
13:14
Speaker 2: about this could be the same. My favorite example the
13:17
Speaker 2: candle business, yeap. It might mean you pouring candles on
13:20
Speaker 2: a Sunday afternoon because it's really therapeutic. One day you
13:23
Speaker 2: go viral and TikTok exciting money win like such a
13:26
Speaker 2: business win. We'll talk about going viral and TikTok and
13:29
Speaker 2: a whole episode one day. But you go viral, everyone's
13:33
Speaker 2: placing candle orders. You've only got two hands. You've only
13:35
Speaker 2: got two hands. How do you pour all the candles? Exactly?
13:38
Speaker 2: It just gets very stressful, Jessica. So we need to
13:41
Speaker 2: think about what could happen in the future. But it
13:44
Speaker 2: is an investment, so it does cost between four hundred
13:47
Speaker 2: and seventy four and five hundred and seventy six dollars
13:50
Speaker 2: depending on the business that you are registering, And it
13:53
Speaker 2: does come with a bit more responsibility in that you
13:56
Speaker 2: need to do a bit more reporting. So you're likely
14:00
Speaker 2: going to have to submit quarterly documentation to the ATO
14:03
Speaker 2: about what's going on with your business, how much you've earnt,
14:06
Speaker 2: how much tax you are anticipating yet to pay at
14:09
Speaker 2: tax time. And something that I do, which a lot
14:12
Speaker 2: of small business owners do, is pay what's called bas
14:14
Speaker 2: and that's is essentially paying your tax in advance, because
14:20
Speaker 2: there is nothing more stressful as business increases, right, even
14:24
Speaker 2: as business doesn't increase, like jess how's tax time as
14:28
Speaker 2: a small business owner. Not very fun, right, But if
14:32
Speaker 2: you're paying BAS, you're breaking up the tax that you're
14:34
Speaker 2: paying throughout the year. And then tax time comes and
14:37
Speaker 2: my accountant sits me down and we kind of do
14:39
Speaker 2: like an audit of like what have you paid? What
14:42
Speaker 2: are things that we could now claim, what are things
14:45
Speaker 2: that you might have missed out on, and what are
14:47
Speaker 2: things that you still have to pay for? And my
14:49
Speaker 2: tax time, like come June thirty, I look at it
14:52
Speaker 2: and I go, okay, well, I'm not going to owe
14:54
Speaker 2: thousands and thousands of dollars. You know, there's a bit
14:57
Speaker 2: of cleanup going there. So like BAS, it's a business
15:00
Speaker 2: activity statement if I didn't say that before, but BAS
15:03
Speaker 2: is kind of like predicting based on your past performance
15:06
Speaker 2: what your future tax will be, so that I don't
15:09
Speaker 2: end up in a sticky situation where I have a
15:12
Speaker 2: heap of tax owing all at one time. Yeah, and
15:14
Speaker 2: that's way all you can ask for, is that? Okay?
15:16
Speaker 3: So question, Yes, if I'm currently assult Trader and I've
15:20
Speaker 3: picked soul Trader because I think that's going to work
15:22
Speaker 3: for me, I am just working by myself, doing my.
15:25
Speaker 2: Thing, doing what you're doing now, exactly right.
15:27
Speaker 3: What happens if I do get to the point, like
15:28
Speaker 3: you said, in a couple of years where maybe I
15:31
Speaker 3: do leave my full time job and I do need
15:33
Speaker 3: somebody to come on and help.
15:34
Speaker 2: Can I change? Of course you can, although it does
15:39
Speaker 2: get a little bit difficult changing. So that's why I
15:42
Speaker 2: always recommend people you know you go. It could be
15:45
Speaker 2: four hundred and fifty bucks like to set up the
15:48
Speaker 2: entity to begin with, why bother. Yeah, sometimes it's worth
15:51
Speaker 2: spending the money on the structure to begin with if
15:54
Speaker 2: that could even be a possibility, and if it doesn't
15:56
Speaker 2: become a possibility, you just have more projections. That's not
15:59
Speaker 2: the end of the world. Please don't get me wrong.
16:01
Speaker 2: I totally understand that it's a privilege to be able
16:03
Speaker 2: to afford literally everything. As somebody who started their business
16:07
Speaker 2: by making although their graphic design of Microsoft Office and
16:10
Speaker 2: screenshotting it go, I get it. But it can be
16:14
Speaker 2: really difficult to change from a sole trader ABN to
16:16
Speaker 2: a company ABN down the track, So I'd really suggest
16:20
Speaker 2: just get it right the first time. But it's not
16:23
Speaker 2: just the difficulty in the paperwork. It can actually be
16:26
Speaker 2: costly to set it up and change it because you're
16:30
Speaker 2: going from a business that you know as a sole
16:32
Speaker 2: trader has value into another company, and structuring it actually
16:37
Speaker 2: can be a little bit more complex than what it seems.
16:40
Speaker 2: So obviously you're going to want to weigh up your
16:42
Speaker 2: decisions financially, time wise and work out which one is
16:47
Speaker 2: the right one for you, because obviously moving to a
16:50
Speaker 2: company is expensive, not to overload you, moving to a
16:54
Speaker 2: company is expensive, But who then owns the company? Yess
16:58
Speaker 2: So it's not just going, oh, well, maybe I'll own
17:01
Speaker 2: your company, just so that's not the question I'm asking.
17:03
Speaker 2: So my personal structure, and this is why I love
17:06
Speaker 2: the Business Bible because I can just tell you what
17:08
Speaker 2: I do. I'm not saying that this is the right
17:10
Speaker 2: thing for you, this is the right thing for me,
17:12
Speaker 2: but I when I set up my companies at the
17:16
Speaker 2: same time established a family trust. So my family trust
17:20
Speaker 2: owns my businesses, not me personally. You personally can own
17:24
Speaker 2: a company, but you need to maybe spend the couple
17:26
Speaker 2: of one hundred dollars sitting down with an accountant going well,
17:29
Speaker 2: if I'm going to set up this company, what is
17:32
Speaker 2: the best way to protect me, what is the best
17:34
Speaker 2: way to own this do I own it personally? You
17:37
Speaker 2: can totally own it personally. That's fine, that's a really
17:39
Speaker 2: simple structure. But your account might turn around and be like, well, actually,
17:43
Speaker 2: what are your plans for the future. So one of
17:46
Speaker 2: the reasons why we made this decision is because in
17:49
Speaker 2: the future, before my business made any money, I was like,
17:52
Speaker 2: you know what I would love for the structure. You know,
17:56
Speaker 2: it's kind of aspirational. It gave me a lot of
17:58
Speaker 2: motivation as well. I'd love to be able to buy
18:00
Speaker 2: an investment property, and I would love to be able
18:03
Speaker 2: to put that investment property in a trust so in
18:05
Speaker 2: the future I can distribute the dividends of that investment
18:09
Speaker 2: property down to my family members. Could I afford an
18:12
Speaker 2: investment property at that point in time, No, Jessica, The
18:15
Speaker 2: answers no, because I was in debt when I started
18:17
Speaker 2: my business. As I said, did you even have one
18:18
Speaker 2: property at the time?
18:19
Speaker 1: No?
18:20
Speaker 2: Hype dream, hype dream. But we want to make sure
18:22
Speaker 2: that we're setting ourselves up for success. And that's one
18:25
Speaker 2: way to additionally protect yourself. That you really should have
18:29
Speaker 2: the conversation with an account and go, well, what does
18:31
Speaker 2: that mean for me? Like, you know, jess you might
18:33
Speaker 2: be hiring your first assistant or content creator or whatever
18:37
Speaker 2: you're doing. But what next? Where does the ball roll? Yeah,
18:40
Speaker 2: so I think it's important to understand one hundred percent
18:44
Speaker 2: to switch gears.
18:44
Speaker 3: Ever so slightly, I just want to go back a
18:46
Speaker 3: few steps because earlier we were chatting about the seventy
18:49
Speaker 3: five thousand dollar threshold, and so if you're earning less
18:53
Speaker 3: than seventy five thousand dollars, you're all gucci. But what
18:56
Speaker 3: happens when you're earning more? Because that's what we all want,
18:58
Speaker 3: right like we want to be earning heat.
19:00
Speaker 2: We're going to become so rich, we're going to be
19:02
Speaker 2: rich af So as soon as your gross income hits
19:05
Speaker 2: seventy five thousand dollars, gross income is total earnings prior
19:10
Speaker 2: to tax or deductions. So when you look at that number,
19:13
Speaker 2: I think it's gross because that's what you could have
19:15
Speaker 2: taken home but you had to pay tax, so fun
19:19
Speaker 2: so and then net is what you captured in the net.
19:21
Speaker 2: That's really big holes, Jessica. So you're not going to
19:24
Speaker 2: forget that now, but you need to register and pay
19:27
Speaker 2: what's called goods and services tax. Summer finance Girly at heart,
19:31
Speaker 2: if you send me an invoice, Jess, and you're not
19:34
Speaker 2: charging the GST immediately, I know how much your business
19:37
Speaker 2: turnover is true, I know you're earning less than seventy
19:39
Speaker 2: five thousand dollars. Yeah, okay, so this is again not
19:42
Speaker 2: personal advice. Do you know what I was doing before
19:45
Speaker 2: I earned more than seventy five thousand dollars? Yes, what
19:47
Speaker 2: I was still charging your GST. I was paying GST
19:51
Speaker 2: because you can pay GST irrespective of what you earn
19:54
Speaker 2: its choice up until seventy five thousand dollars. After seventy
19:59
Speaker 2: five thousand dollars, it's compulsory. Yeah. Before seventy five thousand dollars,
20:03
Speaker 2: they're like, you don't need to do this, you could
20:05
Speaker 2: if you wanted to. Me earning ten thousand dollars, I'm like,
20:08
Speaker 2: I want to because do you know why? It's kind
20:10
Speaker 2: of like left pocket, right pocket. I'm charging you just
20:13
Speaker 2: ten percent GST gets added to your invoice. I put
20:16
Speaker 2: that ten percent to the side, and I just pay
20:18
Speaker 2: it to the government. So I'm not losing money by
20:20
Speaker 2: charging GST. But I knew that by sending out an
20:23
Speaker 2: invoice that charged GST, people would immediately go, oh, she's
20:27
Speaker 2: done this before. Yeah, she's just been earning a fair bit.
20:29
Speaker 2: It's that professionalism thing again, a little bit sneaky. Should
20:33
Speaker 2: you do it? I don't know you do, you Booth,
20:35
Speaker 2: But I did and it made me feel powerful. Af
20:38
Speaker 2: I love that for you. So GST is essentially an
20:40
Speaker 2: added ten percent of the product or service that you
20:43
Speaker 2: are selling, which has to be paid to the tax office.
20:46
Speaker 2: It's not your money, as I said before, it's left pocket,
20:49
Speaker 2: right pocket. Like, it's not going to cost your business
20:51
Speaker 2: more unless you somehow have not a clean banking system
20:56
Speaker 2: and you forget about the ten percent and then you
20:58
Speaker 2: allocate it to something else and then come tag time,
21:00
Speaker 2: they're like, hey, by the way, you've got to pay
21:02
Speaker 2: a GST And you're like, wait what, I don't have
21:04
Speaker 2: that money right now. Yeah, which is why we want
21:06
Speaker 2: clean banking systems, Jessica. But it has to be paid,
21:09
Speaker 2: and you can't just be having no ABN. You must
21:13
Speaker 2: have an ABN at this stage. So the second you
21:15
Speaker 2: get over seventy five thousand dollars, if you had no ABN,
21:18
Speaker 2: favorite's time to get an ABN. Like it's non negotiable
21:21
Speaker 2: at that point because the at looks at it and goes,
21:24
Speaker 2: this is pretty legit, Like, seventy five thousand dollars is
21:26
Speaker 2: a lot of money that we'd let you earn. So
21:28
Speaker 2: once you hit seventy five thousand dollars, your job in
21:31
Speaker 2: business now has two rules. First running the business and
21:34
Speaker 2: second collecting tax for the tax office. Our tax man's
21:38
Speaker 2: sounding pretty happy about that. He's a nice guy. I promise.
21:42
Speaker 3: What does happen if we are maybe not keeping a
21:45
Speaker 3: close enough eye on our bank accounts, maybe we haven't
21:47
Speaker 3: structured it in the best way. Definitely not speaking for experience,
21:50
Speaker 3: but what happens if you miss the seventy five thousand
21:53
Speaker 3: dollars milestone and you are late to register for GST?
21:56
Speaker 2: You're probably gonna have a meltdown? Yep. First, probably gonna
21:59
Speaker 2: just be bit anxious, a little bit stressy. We're not
22:02
Speaker 2: gonna let that be an option. I would register for
22:05
Speaker 2: GST when setting up my ABN, just being real clean
22:08
Speaker 2: from the very start, to be honest for a few
22:11
Speaker 2: good reasons. So obviously, as I said before, once you
22:13
Speaker 2: start charging GST, that's going to be an extra ten
22:17
Speaker 2: percent for your clients or customers to pay. And if
22:19
Speaker 2: you start prices including that ten percent. You don't have
22:22
Speaker 2: to re talk to your clients, Jess. True. So like
22:26
Speaker 2: you get this seventy five thousand dollars, you're partying. You've
22:29
Speaker 2: probably gone out with your part or your friends have
22:31
Speaker 2: some champagne. Like, look at my business, I'm killing it. Yeah,
22:34
Speaker 2: Now you have to go to your clients and be like,
22:36
Speaker 2: by the way prices are increasing ten percent, you don't
22:38
Speaker 2: get more. Actually, I just have to start collecting money
22:40
Speaker 2: for the ATO. I didn't think of. Your client's not
22:43
Speaker 2: gonna love that, yeah, not because they're not happy for you,
22:46
Speaker 2: but like, no one wants to pay more money. Yes,
22:48
Speaker 2: so if you just did it from the start, there
22:51
Speaker 2: aren't any price hikes once you suddenly become qualified to
22:54
Speaker 2: pay for that. Yeah. And I like that, yeah, because
22:57
Speaker 2: I like being paid for what you're worth. I mean,
22:59
Speaker 2: if we're asking for a ten percent pay rise, it's
23:01
Speaker 2: gonna be for Jess, not for the ATO.
23:03
Speaker 3: Right.
23:04
Speaker 2: The second thing is again makes your business look more
23:07
Speaker 2: legit when you charge for GST, and when you don't,
23:10
Speaker 2: it's very clear that you're making less than seventy five
23:13
Speaker 2: thousand dollars. I mean maybe not everyone looks at it
23:15
Speaker 2: the same way. I do, but I definitely you're extra nosy.
23:18
Speaker 2: And if you're working for any other big businesses. I
23:21
Speaker 2: don't mean to be rude here, but like, let's say
23:23
Speaker 2: your freelancer, let's say you're just Greci, right, you are Jessica,
23:26
Speaker 2: and you make content, beautiful content, and that for other brands,
23:31
Speaker 2: they see all of the influences in voices. So if
23:34
Speaker 2: one's coming through with GST and one's not coming through
23:37
Speaker 2: with GST, if you're new in PR, you might go, oh,
23:40
Speaker 2: we just got her invoice for jess she didn't charge GST.
23:42
Speaker 2: What's that mean. They're gonna ask, They're gonna know. Everyone's
23:45
Speaker 2: going to know. And I'm not saying that that's shameful. No,
23:49
Speaker 2: Like it's not a bad thing at all, but you
23:51
Speaker 2: need to understand if that's something you want considered or not.
23:55
Speaker 2: And then three, it's done well ahead of time, so
23:58
Speaker 2: you don't actually have to worry about accidents are missing it,
24:00
Speaker 2: or are paying in arrears or you know, upsetting the
24:03
Speaker 2: tax office, which is my favorite thing not to do.
24:05
Speaker 3: Yeah, I hard agree from me there. I think set
24:08
Speaker 3: it up early. I think that's the premise of this
24:10
Speaker 3: whole episode. Really isn't it like, let's get your ducks
24:12
Speaker 3: in a row now, so that nobody's having a meltdown.
24:14
Speaker 2: Exactly. We don't have meltdowns. And getting your ducks in
24:17
Speaker 2: a row is not just smart when it comes to
24:19
Speaker 2: I guess business and getting the structure right. It's also
24:23
Speaker 2: so essential from my perspective, because it means that you
24:26
Speaker 2: believe in your business. So if you're just like, oh no,
24:29
Speaker 2: just do it through my personal account, it's not worth it.
24:30
Speaker 2: It's not going to grow be like sorry, that's not
24:33
Speaker 2: the mentality that we have when we're starting our own
24:35
Speaker 2: small business. We don't need to take over the world
24:37
Speaker 2: with our small businesses. Like our small businesses could just
24:41
Speaker 2: be that extra ten k year so you get a
24:43
Speaker 2: bougie family holiday once a year, and like that's why
24:45
Speaker 2: we're doing it. But we are proud of that. We
24:49
Speaker 2: actually believe in that, and we you know, have conviction
24:52
Speaker 2: in that because ten ground this year might be twelve
24:54
Speaker 2: grand next year, and like things just creep up and
24:56
Speaker 2: that's great, but the structure is what's going to crucify
25:00
Speaker 2: you if you don't get it wrong, and that's where
25:02
Speaker 2: most people do go wrong.
25:03
Speaker 3: Yeah, for sure, all right, we've given you a lot
25:05
Speaker 3: to think about talking about GST and ABNS and all
25:08
Speaker 3: of those different options. So we know that marinate in
25:11
Speaker 3: your brain for a little marinates, marinate away, and then
25:15
Speaker 3: we're going to head to a quick break and when
25:16
Speaker 3: we come back, we're going to talk about claiming and
25:18
Speaker 3: tax in small business.
25:20
Speaker 2: I love these episodes so much. Don't go anywhere. Welcome
25:27
Speaker 2: back everybody.
25:27
Speaker 3: We've gone over how to set up your business, get
25:29
Speaker 3: it ready for tax time, and now I want to
25:31
Speaker 3: talk about what actually does happen at tax time because it.
25:34
Speaker 2: Seems like my birthday. That's very true, Gin thirty, good
25:37
Speaker 2: time to work in finance, h I know, it's amazing.
25:42
Speaker 3: Is tax onion a little bit different if you're registered
25:44
Speaker 3: as a sole trader versus as a company.
25:46
Speaker 2: Yeah, so it's a good question, and they are actually
25:49
Speaker 2: very different to one another, which might help you decide
25:52
Speaker 2: whether to register as a sole trader or as a business.
25:55
Speaker 2: So sit down, I've written a list. Are you ready.
25:57
Speaker 2: I'm ready. As a sole trader, your profits will be
26:00
Speaker 2: included on your individual tax return, so you will be
26:04
Speaker 2: paying tax at your personal marginal tax rate. Ye, which
26:08
Speaker 2: so we're talking about before yet, so obviously that thirty
26:10
Speaker 2: two and a half percent is just standard, but it
26:13
Speaker 2: goes up much higher, and maybe you're in a situation
26:16
Speaker 2: where you're like, oh, well, actually another you know, ten
26:19
Speaker 2: grand actually pushes me over a threshold. We need to
26:22
Speaker 2: think about that. It's an extension of you and your
26:25
Speaker 2: personal financial affairs, and it actually makes tax time really easy.
26:28
Speaker 2: So like back on the flip side, me trying to
26:31
Speaker 2: do a jump scare. Most like, it's really easy to
26:33
Speaker 2: do your tax when it comes to being a sole trader.
26:37
Speaker 2: If you're registered as a business, you will have to
26:39
Speaker 2: do the tax for your business and your own finances
26:42
Speaker 2: because they're not bundled together like a sole trader, and
26:46
Speaker 2: that is not only more complex, but can be a
26:48
Speaker 2: little bit more costly. So you might be paying I
26:51
Speaker 2: don't know, Jess, what do you pay for your tax
26:52
Speaker 2: return eachy maybe like two hundred and fifty bucks nowadays
26:55
Speaker 2: around that is pretty standard. You'll be paying maybe four
26:58
Speaker 2: or five hundred dollars for a tax return done for
27:01
Speaker 2: your business in addition to your individual tax return. So
27:05
Speaker 2: just keep that in mind. Yep, big businesses pay thirty
27:09
Speaker 2: percent tax rate on profits. Jess, Oh, just flat, just flat.
27:12
Speaker 2: There you go very very sexy. Profit means the money
27:16
Speaker 2: you've made after pay deductions, et cetera, not just the
27:20
Speaker 2: gross income that you look at that you go, well,
27:22
Speaker 2: that's gross, I could have made that. So it's not
27:25
Speaker 2: you know, if you had ten thousand dollars coming in
27:27
Speaker 2: the door as a business, they don't go all right,
27:31
Speaker 2: well you are thirty percent of that. And this is
27:33
Speaker 2: why tax time can be a little bit complicated because
27:35
Speaker 2: you go through that and go, okay, well I paid, Jessica,
27:38
Speaker 2: I also, you know, paid rent for my facility. I
27:41
Speaker 2: also had these printing costs for my business. And you
27:44
Speaker 2: have all these costs the deduction that are deductions, and
27:47
Speaker 2: then at the end of that is your profit and
27:49
Speaker 2: that's what you pay tax on. Okay, that's pretty good.
27:52
Speaker 2: So look it's pretty good. But as we said, big
27:55
Speaker 2: business pays thirty percent. You go, that's pretty sexy, jess
27:58
Speaker 2: because obviously the average marginal tax rate is thirty two
28:02
Speaker 2: and a half cents. It's two and a half percent
28:04
Speaker 2: better off. It's pretty good to make. Just doing some
28:06
Speaker 2: basic maths, not advice again, small business tax jess reduced
28:11
Speaker 2: twenty five percent. Okay, so we're getting closer to that
28:15
Speaker 2: mistage you made. It's much closer. That's pretty good, much
28:19
Speaker 2: more palatable throughout the year. You're obviously, as I said
28:22
Speaker 2: at the first half of this episode, you're going to
28:24
Speaker 2: be required to complete what's called a business activity statement
28:27
Speaker 2: or a MASS as you call it in the industry,
28:29
Speaker 2: which is quarterly. And I've written down it can help
28:31
Speaker 2: it tax time, it doesn't. It definitely does help it
28:34
Speaker 2: tax time, not can it does? It makes me feel
28:37
Speaker 2: so on top of it. I don't like having to
28:40
Speaker 2: talk about tax quarterly. But I promise everything is easier
28:43
Speaker 2: when it's broken down into smaller chunks. Yeah, So it
28:46
Speaker 2: kind of becomes a little bit sexier when you start
28:48
Speaker 2: talking about the cash rate, right, Jessica, Because you know,
28:50
Speaker 2: small business is taxed at a reduced rate of twenty
28:53
Speaker 2: five percent. You go, hold on, so twenty five percent.
28:57
Speaker 2: What if I was, you know, earning this seventy thousand
29:00
Speaker 2: dollars in addition to my normal income, and I've had
29:02
Speaker 2: a really good tax here that it would actually push
29:05
Speaker 2: you as an individual, like if you're working as a
29:07
Speaker 2: sole trader, it is included on your individual tax return,
29:11
Speaker 2: which might push you to the highest marginal tax rate
29:14
Speaker 2: in Australia is forty five percent tax. Yes, and that
29:18
Speaker 2: means you would earn over one hundred and eighty thousand dollars,
29:20
Speaker 2: which if you are an individual who has a PAYG
29:24
Speaker 2: job and a side hustle, it's not that hard to
29:26
Speaker 2: get to that number. Yeah, totally plausible. Totally plausible. Like
29:29
Speaker 2: we're not talking about pipe dreams and oh my gosh,
29:31
Speaker 2: I wonder like one hundred and eighty thousand dollars for
29:33
Speaker 2: a PAYG job. You go, wow, that's a lot of money. Yeah,
29:36
Speaker 2: but if you're doing two jobs at one time, you
29:38
Speaker 2: kind of go, all right, well, I might earn you
29:40
Speaker 2: one hundred and ten hundred and twenty in my normal job,
29:42
Speaker 2: and then I might, you know, earn another seventy. Well,
29:44
Speaker 2: now you're at the highest marginal tax rate forty five thousand.
29:47
Speaker 2: We need, yeah, forty five percent. You're not on tax,
29:51
Speaker 2: you're on practical advice. I'll be on the math side
29:54
Speaker 2: of things like this, so to keep it that way,
29:56
Speaker 2: but I think it's really important to I guess look
29:59
Speaker 2: at that because twenty five five percent bit sexier than
30:01
Speaker 2: forty five percent. Yeah. There's also obviously going to be
30:04
Speaker 2: things about distributing that income. So we'll talk about that later,
30:09
Speaker 2: but they are very different.
30:10
Speaker 3: Okay, before the break, I gave the example of someone
30:13
Speaker 3: who's looking at the sole trader model, but they could
30:15
Speaker 3: maybe decide to go the other way and go for
30:18
Speaker 3: a business instead. Are there any advantages around tax time
30:22
Speaker 3: to eat the model that may help people decide which
30:24
Speaker 3: category would be the best option for them.
30:26
Speaker 2: So the answer is yes. First thing first, as a
30:28
Speaker 2: sole trader, tax is just easier and faster to do.
30:31
Speaker 2: It's the same way you've been doing tax always. It's
30:33
Speaker 2: just another line item, pop it in and it spits
30:36
Speaker 2: it out. It's very straightforward. The ATO now has their
30:38
Speaker 2: E tax system super super easy. Especially as a business owner,
30:43
Speaker 2: I feel like once you start running a business, you
30:46
Speaker 2: get like a little bit overwhelmed. You're like, oh my gosh,
30:47
Speaker 2: what's tax time going to be. It's going to be crazy.
30:50
Speaker 2: If you've got all your receipts, if you've been keeping
30:52
Speaker 2: track of your income, it's a cinch, I promise. However,
30:55
Speaker 2: if you register as a business, you're taxed on the profit,
30:58
Speaker 2: meaning that before tax time you could actually look at
31:01
Speaker 2: business claims to help you reduce your profit and pay
31:04
Speaker 2: less tax and you can even pay yourself out of that.
31:08
Speaker 2: So for example, you might have made like sixty grand
31:11
Speaker 2: for the year, and then you bought a two thousand
31:13
Speaker 2: dollar laptop and decided to pay yourself fifty thousand dollars.
31:16
Speaker 2: That's actually fifty two thousand dollars in expenses, So you're
31:20
Speaker 2: really only claiming an eight thousand dollars profit, Jess, and
31:24
Speaker 2: you'll be taxed from that instead of the full sixty
31:27
Speaker 2: thousand dollars, which I think a lot of people assume. Yeah, okay, right,
31:32
Speaker 2: So with that said, if you are a service based business,
31:35
Speaker 2: it might actually also be advantageous to be a sole trader. However,
31:39
Speaker 2: if you need to buy products or materials to make
31:41
Speaker 2: your business run, like, you probably have a heap of
31:43
Speaker 2: outgoing costs, Whereas at tax time it would be better
31:47
Speaker 2: to just have registered as a business because like you're
31:49
Speaker 2: claiming them in arrears, if that makes sense. Yeah, so
31:52
Speaker 2: it's just a little bit more complex.
31:54
Speaker 3: Yeah, that's interesting thinking about claiming something back under tax
31:58
Speaker 3: because I feel like, even if you're not a business owner,
32:02
Speaker 3: at tax time, everyone's always saying what can I claim, Like,
32:05
Speaker 3: how can I maximize the money that I've earned?
32:07
Speaker 2: Because no one likes paying cap No one likes paying tax.
32:09
Speaker 2: But I also this is such a spicy opinion. I'm
32:12
Speaker 2: always like, why are we here justifying purchases for things
32:17
Speaker 2: that your business might not need just so you can
32:19
Speaker 2: kind of get a discount on them. Like, yes, you're
32:22
Speaker 2: getting a tax benefit, but it doesn't make the item free.
32:25
Speaker 2: You don't need a new car or a new laptop
32:27
Speaker 2: just because tax time is coming. And yeah, like if
32:30
Speaker 2: you genuinely need your new laptop, jests, good time to
32:32
Speaker 2: do It's good time to do it. Do you know
32:34
Speaker 2: what there's usually sales on Like office works is always like, oh,
32:37
Speaker 2: look at our laptops coming up to the end of
32:39
Speaker 2: financial year. Sexy, very nice if you already need one,
32:43
Speaker 2: because the claiming process happens really quickly. So right, like
32:47
Speaker 2: let's say you're like, oh, actually do need a laptop.
32:49
Speaker 2: It's June. You buy it on the fifteenth of June.
32:51
Speaker 2: You can claim that ye at the thirty June tax time.
32:55
Speaker 2: But like, if you bought it in December last year,
32:57
Speaker 2: still claimable jests Yeah, I'm just trying to like stuff
33:00
Speaker 2: it in that year. And I just go, this is
33:01
Speaker 2: so silly. You are making purchases that you didn't need
33:04
Speaker 2: to make. So what can we claim then, is my question?
33:07
Speaker 2: Oh my gosh, there are so many things that you
33:08
Speaker 2: could claim, and I could go on and on and
33:11
Speaker 2: on about it because it totally depends on what industry
33:13
Speaker 2: you're in. You in the adult industry, Jess, you could
33:15
Speaker 2: climb loop there go. Are you in gardening and farming? Great?
33:20
Speaker 2: Do you know you can claim your dog and garden
33:22
Speaker 2: notmees oh like wild? So let's give you some more
33:25
Speaker 2: practical advice because I don't think either of those things
33:27
Speaker 2: really help you. No, but please don't guess what you
33:31
Speaker 2: can claim. Don't just go, oh, I assume I'd be
33:33
Speaker 2: able to claim that, because you don't want to do
33:35
Speaker 2: this incorrectly, because if the taxman audits you and it's incorrect,
33:39
Speaker 2: not only are they going to ask you for the money, Jess,
33:42
Speaker 2: they're gone find you.
33:43
Speaker 3: That's not good as someone who's been audited as well,
33:46
Speaker 3: Like they dot their eyes and they.
33:47
Speaker 2: Cross their t's. Yeah, and it's kind of like not
33:49
Speaker 2: innocent until proven guilty. With the ATO, they're like, you're
33:52
Speaker 2: guilty until you prove that you're innocent. And with you
33:56
Speaker 2: when you got ordered to have your receipts. You would
33:58
Speaker 2: have had your receipts textfully, but like in that if
34:00
Speaker 2: you were me, yeah, stressful, Thankfully I have Jess now,
34:03
Speaker 2: so we're okay, But historically I'm like, I don't have
34:06
Speaker 2: that receipt But I would advise getting an accountant who
34:09
Speaker 2: specializes in the field that your business is in, who's
34:12
Speaker 2: actually going to know what you can and can't claim. Now,
34:15
Speaker 2: Jess used to do your tax yourself, and I bullied
34:18
Speaker 2: you because I am the world's biggest bully, and I said,
34:22
Speaker 2: you have to go to an accountant. Yes? Was that
34:24
Speaker 2: a good decision? Life changing decision? Why?
34:27
Speaker 3: I think at first I was always like, oh, I
34:29
Speaker 3: can do my own tax myself. Why would I pace
34:30
Speaker 3: when I was do it, like you said, two d
34:31
Speaker 3: fifty bucks, you know, a decent amount of money, Like,
34:33
Speaker 3: if I.
34:34
Speaker 2: Can, it's a matter of money, Yeah, why do it?
34:36
Speaker 3: But for me the amount of things that I just
34:38
Speaker 3: didn't know that I could claim you as a sole trader, and.
34:41
Speaker 2: I obviously sent you to someone who knew what they
34:43
Speaker 2: were doing in your space. And I remember you walking
34:46
Speaker 2: away being like, oh, she said I could claim this,
34:48
Speaker 2: And I was like, well, yeah, of course, you can
34:50
Speaker 2: because you aren't the tax person. And like, I'm a
34:52
Speaker 2: money person, so I kind of knew some of those things. Yeah,
34:55
Speaker 2: like invest the money one year and you know, if
34:58
Speaker 2: it doesn't work out, you get to claim it or
35:00
Speaker 2: next year's tax. It's a win and then you don't
35:02
Speaker 2: have to do it again. But nine times out of ten,
35:04
Speaker 2: i'd say an accountant puts you in a way better
35:07
Speaker 2: position than you could yourself.
35:09
Speaker 3: Yeah, and if you need a recommendation, we're happy to
35:11
Speaker 3: pass you along to someone. So oh yeah at your website, Well, yeah,
35:14
Speaker 3: there's a page on our website. Hit up that and
35:16
Speaker 3: we can match you up with somebody.
35:17
Speaker 2: I mean, we'll match you up with someone real good.
35:19
Speaker 2: But I hate to tell you this, just as accountants
35:21
Speaker 2: not taking on new clients un lucky. Sorry. Also another
35:25
Speaker 2: hot tip, Jess is have a look on the ATIO website.
35:28
Speaker 2: I know you probably don't frequent it. You're probably not
35:30
Speaker 2: like waking up in the morning meal. I'm just gonna
35:32
Speaker 2: have a little cover of Joe and I'm gonna sit
35:34
Speaker 2: down on my laptop and look at the ADO website.
35:37
Speaker 2: That's what I do, though, be more like VD I
35:40
Speaker 2: like it, But look at the ATIO website because they
35:42
Speaker 2: have a whole section around what you can claim and
35:45
Speaker 2: what you can't claim, and it changes depending on the
35:48
Speaker 2: business that you run. And they also post lots of
35:51
Speaker 2: articles of like, I mean, they don't market it this way.
35:54
Speaker 2: I'm just trying to be sexy marketing for the ATO,
35:57
Speaker 2: but like they have some horror stories on there too,
36:00
Speaker 2: of like this person tried to claim this and they
36:02
Speaker 2: got in trouble in this way.
36:03
Speaker 3: Yeah.
36:04
Speaker 2: I just love a pervy story me too, so kind
36:06
Speaker 2: of helpful.
36:06
Speaker 3: They have a really great forum too, where it's manned
36:09
Speaker 3: by a tier stuff and you can actually head in
36:11
Speaker 3: there and post your question or be like, oh, theoretically
36:14
Speaker 3: if I did this and did that hypothetically, yeah, Like
36:17
Speaker 3: they can't provide you personal advice, but you can kind
36:20
Speaker 3: of ask generalized questions and it's coming straight from the source.
36:23
Speaker 3: You know that it's correct because sometimes those clickbaity articles
36:27
Speaker 3: that you see floating around at tax time.
36:29
Speaker 2: Yeah, like oh my gosh, did you know you can
36:30
Speaker 2: claim your pridor handbag? I wouldn't get those to take
36:34
Speaker 2: those legitimately. I also think it's really important to check
36:37
Speaker 2: the Atier website because each year in the lead up
36:40
Speaker 2: to tax time, the ATO put out like a big statement,
36:44
Speaker 2: and the statement usually explains what they're targeting this year. Yeah,
36:49
Speaker 2: let's use a recent example, so I think it was
36:52
Speaker 2: this year they came out and said, all right, we're
36:54
Speaker 2: changing the work from home claiming rules because during COVID,
36:58
Speaker 2: we gave you guys a whole heap of care sessions
37:00
Speaker 2: on what you could and couldn't claim from home, and
37:02
Speaker 2: obviously we're a little bit more lenient with that because
37:05
Speaker 2: lots of people were working from home. Now we're cracking
37:09
Speaker 2: down on that. If you're claiming work from home, you're
37:11
Speaker 2: going to need to back it up because we're probably
37:13
Speaker 2: going to audit a heap of people in this situation.
37:16
Speaker 2: So it's nice to just know where they're tightening up.
37:19
Speaker 2: Not so that you can protect yourself even more, because
37:21
Speaker 2: you should be doing the right thing in the first place,
37:23
Speaker 2: but it's just pervy. It's good to keep her finger
37:25
Speaker 2: on the pulse and stand good reminder. And also, things
37:30
Speaker 2: that you could claim last year might not be claimable
37:32
Speaker 2: this year, so there might have been certain concessions or
37:34
Speaker 2: certain leniencies that they're like, oh, well, Jess, we're going
37:37
Speaker 2: through COVID, so you can claim this this year, and
37:40
Speaker 2: then they can't next year. So, for example, there's an
37:42
Speaker 2: uproar in the She's on the money community this year
37:45
Speaker 2: because the instant asset right off amount is actually decreasing
37:48
Speaker 2: next financial year, or it has now decreased this year,
37:51
Speaker 2: whereas historically you could claim a lot more on that.
37:54
Speaker 2: So you just want to have your finger on the pulse,
37:56
Speaker 2: because if you're going to make decisions financially, let's make
38:00
Speaker 2: sure that you're not making them based on rules that
38:02
Speaker 2: don't apply to you anymore.
38:04
Speaker 3: Yeah, so don't guess tax claims. We don't want to
38:06
Speaker 3: be dancing with the devil, or in this case, the
38:08
Speaker 3: tax man. Excellent advice.
38:10
Speaker 2: Oh hold on one more thing. Obviously I was saying
38:13
Speaker 2: to you earlier, like, oh, yeah, I registered for GST earlier.
38:16
Speaker 2: One of the additional benefits of registering for GST is
38:20
Speaker 2: that you're able to claim it back. So if you're
38:23
Speaker 2: not registered for GST JS, you're not able to claim
38:27
Speaker 2: back the GST on any of your expenses or materials
38:29
Speaker 2: that you purchased to sell. Okay, interesting, just good to
38:33
Speaker 2: know because you might go, oh, I claim that back
38:35
Speaker 2: at tax time because you've heard that gest is claimable.
38:37
Speaker 2: It's claimable if you're paying it. Yeah, so it's like
38:39
Speaker 2: a two way street. If you're not on the two
38:41
Speaker 2: way street, you don't just get to claim it when
38:43
Speaker 2: you're not paying it. That makes total sense.
38:46
Speaker 3: Is there anything you want to leave us with about
38:48
Speaker 3: bank accounts?
38:50
Speaker 2: Are you going to let me talk about bank accounts
38:51
Speaker 2: in this episode too? Your favorite topic? Oh, this is
38:54
Speaker 2: my favorite episode. We don't even need the Sheese on
38:56
Speaker 2: the Money podcast as a whole anymore. We just need
38:58
Speaker 2: Victoria talking about banking systems. So yes, obviously, always open
39:04
Speaker 2: a new bank account for your business, whether it is
39:05
Speaker 2: big or whether it is small, because it's going to
39:08
Speaker 2: help you keep track of all of that money that
39:10
Speaker 2: is coming in and going out. And I promise you
39:12
Speaker 2: are going to want to keep track of that. If
39:15
Speaker 2: you're a registered for JSD, because obviously can't give personal advice,
39:17
Speaker 2: you could potentially think about opening a separate bank account
39:20
Speaker 2: for that money to go into it. I do that
39:23
Speaker 2: personally where you're not going to spend it. I do
39:26
Speaker 2: the same for tax. So while we said earlier we
39:30
Speaker 2: withhold thirty percent tax, so like my business pays thirty
39:34
Speaker 2: percent tax, say ten thousand dollars payment comes in, I
39:39
Speaker 2: automatically put three thousand dollars into my tax account. And
39:42
Speaker 2: I do that because it makes me feel so comfortable.
39:45
Speaker 2: I go immediately, if we pretend this was profit, I'm
39:49
Speaker 2: going to be paying three grand tax on this at
39:51
Speaker 2: a minimum. And then I take my JSD and pop
39:53
Speaker 2: that in a separate account, and I know that I'm clean.
39:56
Speaker 2: I then use the money that is left over, So
39:59
Speaker 2: the seven thousand dollars left over, I leave that in
40:01
Speaker 2: my business account, and that's what pays my bills. That's
40:04
Speaker 2: what keeps the light on. Coming to tax time, I
40:08
Speaker 2: know that I have the money set aside to pay tax.
40:10
Speaker 2: I pay tax from that. My business accountant goes through
40:14
Speaker 2: everything at tax time and then lets me know at
40:16
Speaker 2: the end of the financial year what my true profit is.
40:19
Speaker 2: And I like it that way, and it's honestly, I
40:21
Speaker 2: would say a privilege to act that way, because I'm
40:23
Speaker 2: technically putting aside a full thirty percent irrespective of what
40:26
Speaker 2: my costs are, because, as you guys know, I have
40:29
Speaker 2: staff to pay, I have rent to pay, I have
40:31
Speaker 2: overheads like do you know how many subscriptions I pay for?
40:33
Speaker 2: Like Photoshop and like podcasting apps, I cannot it's expensive,
40:38
Speaker 2: website management fees. Like we'll go through all of these
40:41
Speaker 2: hidden costs of business at some point, but like, I
40:43
Speaker 2: do not realize how expensive it is. Side note Jessica,
40:47
Speaker 2: to have an edm ah, so to have an email
40:50
Speaker 2: marketing platform, you go, oh, just sign up for Mailchimp.
40:53
Speaker 2: And that's what I did when I started cheese on
40:55
Speaker 2: the money, just went straight to mail Chimp. I was like, Slate,
40:57
Speaker 2: it's free, do we love that? And you get to
40:59
Speaker 2: a certain amount of subscribers and they're like, hah, it's
41:01
Speaker 2: paid to play, and you're like, oh, okay, no, that's fine,
41:03
Speaker 2: I've got some subscribers, I'll pay, and then you get
41:06
Speaker 2: more subscribers. Anyway, back to the point separate accounts because one,
41:11
Speaker 2: I like clarity, but two, putting aside that money means
41:14
Speaker 2: that I sleep really well at night. Yeah, knowing that
41:17
Speaker 2: there's money in an account to pay tax, there's money
41:19
Speaker 2: in my other account to pay for my staff and
41:22
Speaker 2: my team, and then at the end of the day,
41:24
Speaker 2: we get to talk about profit once tax time comes
41:27
Speaker 2: and goes. So I think it's really important to be
41:29
Speaker 2: structured properly, and it might seem like a lot for
41:32
Speaker 2: now because you're like the I have literally just started
41:35
Speaker 2: my business. I earn like four dollars. You've got rocks
41:38
Speaker 2: in your head, like, I cannot believe it. I just
41:40
Speaker 2: went to sign up for this new business banking account.
41:43
Speaker 2: It's going to cost me ten bucks, Like are you joking?
41:45
Speaker 2: Ten bucks? And I haven't even made a profit yet. Yeah,
41:48
Speaker 2: a promise that investment is worth it and getting it
41:52
Speaker 2: right at the start is going to save you so
41:53
Speaker 2: many headaches and also any questions from the tax man later.
41:57
Speaker 3: Yeah, and on a smaller scale, having that separate account,
42:00
Speaker 3: if you're doing all of your spending from that account
42:03
Speaker 3: as well, it makes me really handy at tax time
42:06
Speaker 3: if you're someone who.
42:06
Speaker 2: Maybe does lose their receipts or forgets.
42:08
Speaker 3: What they have and what they could claim. It's almost
42:11
Speaker 3: like an itemized list of everything that you purchase.
42:13
Speaker 2: So it's super duper handy, so easy. Your accountant and
42:17
Speaker 2: your bookkeeper at some point when you have both of
42:19
Speaker 2: those are going to love that. You're going to love
42:21
Speaker 2: that more because you're not filtering through Oh no, that
42:24
Speaker 2: was zoobreets. Oh that was me, Oh that was you
42:26
Speaker 2: know me and sports girl. Oh, actually that's a business expense.
42:29
Speaker 2: Start that one. Yeah, Like that's not helpful. That is
42:33
Speaker 2: not an effective use of your time. And as a
42:35
Speaker 2: small business owner, you only have so much time. We
42:37
Speaker 2: need to make the most of it. And having a
42:39
Speaker 2: clean banking system is going to make it easier. And
42:42
Speaker 2: just on to that point of like, if you're someone
42:44
Speaker 2: who loses your receipts, like Victoria Divine Years, you're going
42:48
Speaker 2: to start an album on your phone and take a
42:50
Speaker 2: photo of every receipt that comes in so that you
42:52
Speaker 2: know that it's stored somewhere. That helps me a lot.
42:56
Speaker 2: I mean, the ATO app actually enables you to upload
43:00
Speaker 2: it directly, but like, I don't know if I want
43:02
Speaker 2: to upload it right now, Like my accountant might go,
43:05
Speaker 2: oh vi, that you know, work lunch only. Some of
43:07
Speaker 2: it's claim. I just I like having it separately so
43:10
Speaker 2: I can provide it all to my accountant. Yeah, separate.
43:13
Speaker 2: But then also you can actually upload your receipts directly
43:16
Speaker 2: to the ATO portal throughout the year to keep track
43:19
Speaker 2: of them here. That's also free. There you go. I
43:23
Speaker 2: feel like we've covered a lot too. I feel like
43:24
Speaker 2: we've covered too much. It was a big episode. I
43:26
Speaker 2: am really sorry to all of the people at the
43:28
Speaker 2: start of this episode that I might have got hyped
43:30
Speaker 2: up when I said this is a really sexy topic,
43:32
Speaker 2: because it wasn't aware like. But I also think being
43:36
Speaker 2: empowered in business, being on top of your numbers, that
43:40
Speaker 2: is arguably very sexy.
43:41
Speaker 3: I completely agree. And now you know how to set
43:43
Speaker 3: yourselves up for tax time without getting fined, without getting
43:45
Speaker 3: in legal trouble, and hopefully without getting a headache.
43:47
Speaker 2: And so your business goes exactly right. We love that.
43:50
Speaker 2: All right, Well, have a really good week, guys. We'll
43:52
Speaker 2: see you next month for a business Bible episode. But
43:55
Speaker 2: as always, the conversation is going to continue over on
43:58
Speaker 2: our Facebook group business Buiable, not She's on the Money.
44:02
Speaker 2: We're going to keep that one separate because not everyone
44:04
Speaker 2: cares about business. That's okay, and that's all right. But
44:07
Speaker 2: we've found our niche and we love them hard. Yes,
44:09
Speaker 2: we do your our people. See you next time, guys.
44:12
Speaker 1: Hi.
44:19
Speaker 4: The advice shared on She's on the Money is general
44:22
Speaker 4: in nature and does not consider your individual circumstances.
44:25
Speaker 2: She's on the Money exists purely for educational purposes and
44:29
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Speaker 2: financial decision. If you do choose to buy a financial product,
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Speaker 2: read the PDS TMD and obtain appropriate financial advice tailored
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