Even with all the freedom that it affords you, freelancing is still a pretty tough gig. To keep yourself afloat, you’ll have to multitask like crazy, all while constantly marketing yourself and maintaining your brand. A lot of hard work and patience goes into making it worthwhile, so it's a pretty big deal when you finally start to earn! But as a freelancer with a profitable business, it's important not to forget one more crucial aspect to factor: your taxes.
For many freelancers in Australia, these might be totally unfamiliar waters. From filing them to actually paying them, there's bound to be some confusion as to how to handle them. Since blogging, in particular, is a relatively new profession, the guidelines released by the Australian Taxation Office (ATO) are still somewhat vague and offer insufficient guidance.
To help you out a bit, here are some tips that will help you navigate income tax returns a little more easily:
1. Familiarise yourself with the most common deductions
Generally, ordinary and necessary business expenses are allowed to make some business deductions. It's challenging to determine an exhaustive list that covers all self-employed persons, so it comes down to sound judgement and irrefutable fact. Even bloggers may face this difficulty because content creation varies so widely.
While this is by no means an exhaustive list, some common deductions can include:
Promotions, advertising, and design;
Internet and computer costs;
Communication device-related expenses; and
Office equipment and expenses.
2. Keep a separate bank account
If you haven't already done so, setting up a fresh new bank account solely for your business can make filing income tax returns much easier. It's easy to get personal and business expenses mixed up with a single account, which can lead to future issues.
Separating these will make it easier when it's time to do your bookkeeping, so you're not left trying to figure out why the numbers aren't balancing in your accounts. This way, every expense related to your business will be accounted for and easily checked in one place.
3. Keep on top of your documentation
Simply put, the most important tip here is to document everything. Bank statements and receipts should be kept for a minimum of three years, tax returns for seven years, and business certifications and registrations for life.
It's also worth investing in some simple software to keep organised. Google Drive and Dropbox can be essential for backing up all your important business-related documents and files. Not only that, but you can take them with you anywhere, making them easily accessible at a moment’s notice!
Apps like Xero or Freshbooks can help you keep your receipts organised, while Hubdoc can be used to save your bank and credit card statements.
4. Outsource your bookkeeping and accounting
They say that time is money—which is even more especially true in business. You might be asking yourself if all the time spent on figuring out how to do your tax returns is worth what you're losing in hours of productivity and content making. The short answer is yes, mainly because of compliance concerns!
However, another option could be to pass your bookkeeping responsibilities to professional ECommerce accountants. Not only can they ensure your compliance with the ATO, but they can also cover the preparation of your tax returns and financial statements, and more.
Blogging is a profession that's here to stay. As the government continuously recognises more freelance work as legitimate, everybody should be prepared to fulfil the right tax obligations. Having to navigate this unfamiliar territory might be anxiety-inducing, but with the help of ECommerce accountants at your hand, figuring out your taxes is as good as looking at a report from your service provider!
Are you a blogger or freelancer looking for the top ECommerce accountants to help you out with your business? The ECommerce Accountant has got you covered! We offer several accounting-related services, including accounting compliance, understanding your financial figures, cash flow forecasting, accounting software, and more. If you'd like to meet with our accountants for online business, then check out our website today!