Tax Time - Keeping Proper Records
With 18% of Australian workers working as independent freelancers Shane Reardon Deputy Commissioner of Taxation says the biggest issue facing freelancers is that of record keeping. This matters for two reasons. Firstly because it's required by law that you retain proper records, but as importantly, you'll end up paying too much tax. You also run the risk of submitting an incorrect return which may result in fines etc. Peter Strong of the small business council agrees," you must keep good records" he says, "get help and advice from your industry association, from your colleagues in the field, and get an accountant who knows your sector. Don't try to economise by not using and accountant. But, equally, learn to keep your own records well. Accountants love shoe boxes – they can charge you heaps for sorting them. You don't have to get complicated software but get a system". Software is not necessarily the magic bullet as you still have to feed it the details. So again it comes down to the inescapable fact that you must know how to keep and maintain records. Two excellent ATO seminars are Record Keeping and Tax Basics. Check with the tax office for a seminar near you.
Reardon also highlighted that the next most important thing for freelancers to be aware of, is good cash-flow management. "If you are registered for GST you must pay these sums to the ATO, usually quarterly. If you don't, one quarter becomes two quarters, becomes three and by then finding the cash can be overwhelming. "Talk to us, and talk early", he says. "There are may ways in which the Tax Office can help you.including manageable repayment options, interest free in some cases."
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This article was published in the Freelance-Market Newsletter 59.