Tax and being self employed

The term self-employed, as used in Australia, means a sole trader’ or someone in a partnership, and not a limited company or trust. If you have a limited company, you must pay corporate or company tax on your profits and also need the services of an accountant to deal with these issues.

You’re generally better off being self-employed than employed, as you’re eligible to claim more allowances in legitimate business expenses such as telephone bills, travel to and from work, and work clothes or uniforms than employees paying PAYG tax. Another advantage for the self-employed is the delay between making profits and paying tax on them, as the self-employed and small businesses usually pay their tax under the PAYG Installments system.

As you become self employed, you will face certain tax burdens, where it is difficult to calculate your self employment tax. However with little effort you can easily overcome this by using the tax payment service where it enables you to make small, regular, increments as you go along. 

This scheme is liked by many as it gives you the freedom to make regular increments instead of depositing huge sums of self employment tax at the end of the financial year. It should be ensured that you calculate the self employment tax as accurately as possible and make sure that you are depositing the correct amount of money each increment. Therefore calculating the self employment tax as accurately as possible is of prime importance. This is easily completed by using ATO’s Tax Calculator, where when you enter your gross amount for the week, your approximate tax will appear.

Legally you can get exemption for all your valid business expenses while you are calculating the self employment tax. So you can take into account wide range of expenses and write them off. The things can vary from mileage to expenses incurred in buying furniture or for that matter for availing services such as internet. But you have to have the receipts for all these expenses.

Using MyMate’s Tax Payments Service will enable this process to be less stressful and user friendly. Using the service, MyMate’s tax calculators which automatically work out how much tax you need to pay on how much you want to declare. You can then pay it either by Cheque, Direct Debit, BPay or Credit Card, ensuring the process is easy and manageable.