Hi
Looking to start an online business.
I will mostly be selling my notes to prepare for certain competitive examinations and provide online coaching etc.
What is the procedure I need to follow to set it up in terms of legalities and taxation?
I will be just selling it through Gumtree ads or Facebook.
Any advice would be appreciated.
Thanks
If you're making a couple thousand bucks (this part isn't legal advise) I wouldn't bother declaring anything.
Lucky this wasn't 'advise' because it is horrible. It would clearly be a business (rather than a hobby) within the ATO's definition, so tax should be paid on any income.
Technically true. But tshow did say "If you're making a couple thousand bucks", which IF it's OP's only income, or most of OP's income, will be far below the threshold that it's practically irrelevant for tax purposes.
Though equally valid (or really, more valid) is that in that case there's no harm in declaring it anyway.
Yeah better to declare - even if under the threshold. With all their data matching you don't want to be tagged as a non-declarer.
This is something I'm doing besides my fulltime work so should I just declare this as part of my income when I file tax next year.
I donot provide any invoice to any customer it's just that they take the material and transfer the money to me.
I can just calculate or keep a spreadsheet in terms of earnings and update it regularly I guess.
Any thoughts?
@ProBoDoBo: Sounds fine, double check with your bank statement before you file your taxes? That's all I can think of really.
It would clearly be a business (rather than a hobby) within the ATO's definition
You would think so, yet - $36m in profits: gambling business just a hobby, ATO told
Well gambling is a hobby for a lot of people. Providing exam notes or coaching is probably not a common hobby for the most part…
@djkelly69: The amount of profit isn't the determining factor; it's the intent and way in which you go about it.
albeit gambler's intend to make a profit however it's considered a windfall gain - if they taxed it they would have to let people claim gambling losses and lose out big time!
Sole traders
If you operate your business as a sole trader, you must lodge a tax return even if your income is below the tax-free threshold. This includes:
- tax return for individuals including the supplementary section
- business and professional items schedule for individuals.
In your return, report:
- your business income less the business deductions you can claim
- other income, such as salary and wages (from a payment summary), dividends and rental income, less any deductions against this income.
You don't have to work out the amount of tax you are liable to pay. We'll do this for you when you lodge and issue an assessment showing either the amount of tax owing to us or your refund. If you have paid PAYG instalments during the income year, we'll automatically credit these instalments to you in your assessment.
So, I need to get an ABN?
No, unless you sell over $75k.
75K is the GST threshold, ABN is required for all businesses irrespective of GST and turnover.
With an ABN you can:
confirm your business identity to others when ordering and invoicing
avoid Pay as You Go (PAYG) tax on payments you receive
claim Goods and Services Tax (GST) credits
claim energy grants credits
obtain an Australian domain name.Doesn't that $75K threshold relate to registering for GST?
@Baysew: So
I get an ABN and register my business name?
Anything else I need to take care of?
How do I make invoice for the sale?
I will register as a sole trader!
@ProBoDoBo: I would use QuickBooks for Invoicing.
Plus with Quickbooks you can do:
* Book Keeping
* Have a Pay Roll for your employees
* Keep Transactions Details (You need to keep these records for up to 5 years)
* Allow customers to pay by credit card or pay pal
@No Username: Thanks a lot for that. I found Invoicely and its good as I just need to make invoices for myself to keep a track so it'll help with that.
It is basically a very informal business so people just pay but I keep a track!
If you're making enough money that ATO would notice, you can either lodge it with your personal returns or start a new sole provider ABN.
If you don't have much running costs, a sole provider ABN is pointless.
If you're making a couple thousand bucks (this part isn't legal advise) I wouldn't bother declaring anything.