Conquer your fear and start your own side hustle with our tips!
Starting your own business is hard and risky, a good hedge against the risks of starting your own business is to begin working on a side hustle while working a full-time job. There are many businesses you can start while still working full-time, such as graphic design, consulting services, online coaching, affiliate sales and marketing.
When you conquer your fear and decide to start your own side hustle, you will have a lot questions, review this list of 7 questions a side business owner may have:
1. Is It Legal?
For most people, there is no restriction of running a side hustle, however, read your employment contract carefully, if there’s any potential for a conflict of interest or any concern that your new work might compete — even in a small way — with what you do currently, then be very careful about what you say and do.
2. What Kind Of Business Structure To Start With?
You can choose a sole trader, company, trust or partnership if you do the business with other people, but most people choose sole trader when they start their side hustle.
A sole trader is the simplest form of business structure and is relatively easy and inexpensive to set up. As a sole trader you will be legally responsible for all aspects of the business. You’ll generally make all the decisions about starting and running your business and you can employ people.
3. Do You Need To Declare Your Income To The Government Via Your ABN Registration?
If you’ve made a decision to start a side hustle and have done something about it to operate in a businesslike manner, and you intend to make a profit – or genuinely believe you will make a profit from the repeat similar types of activities, you will need to register your ABN and report your side hustle income regularly to ATO.
4. Do I Need To Register A Business Name?
When setting up your business, you are permitted to trade under your personal legal name/s, if you are happy to work as “John Smith”, then registering the same as a business name is not necessary. However, if you like to conduct your business under an unrelated name, such as “John’s Plumbing”, then this is required to be registered as a business name.
5. Do You Need To Register For GST?
You must register for GST if:
• Your business has a GST turnover of $75,000 or more,
• You provide taxi travel for passengers in exchange for a fare as part of your business, regardless of your GST turnover. This rule applies to both taxi owner drivers and people who just rent a taxi, for example, Uber driver provide taxi services so need to register for GST.
As a business owner, it's your responsibility to register for GST if your turnover exceeds the $75,000 threshold or is likely to exceed if.
The ATO advises that if you've just started a new business and expect it to earn $75,000 or more in its first year of operation, you should register for GST. When your expected annual turnover is less than $75,000, it’s your own discretion to decide to register for GST or not, if your business is not registered for GST, you can’t charge GST.
6. Does The $75,000 Threshold Include Your Full Time Wage Or Is It Separate?
GST turnover is your business's gross income, not your business's profit, also it doesn’t include your full time wage. Please note this is just for GST purpose, when your sole trader ABN is registered for GST, there will be two kinds of taxes you will need to report to ATO - GST and Income tax:
• To report your Sole Trader GST, you only need to report your income from your Sole trader ABN, not including your employment wages, you will normally report GST to ATO annually if your Turnover is less than $75000 (except if you provide tax services, such as taxi driver or Uber driver) or quarterly if your turnover is more than $75000.
Every financial year, you will need to report your personal Income tax through an individual tax return, for income tax purpose, you will need to combine your employment wages income and your Sole Trader business profit, your individual tax return will include a separate Sole Trader business schedule, you pay income tax on the combined income under your personal name.
Written by Max Chen
Headway Accounting & Taxation is a boutique accounting firm that provide high quality and tailored services to a wide range of clients. With our expertise and emphasis to deliver innovative and cost-effective services, Headway Accounting & Taxation is a firm that focuses on client success.
Contact them at: www.headwayaccounting.com.au
The latest insights in your mailbox