Operating as a sole trader consultant or freelancer has many benefits - like being your own boss, choosing who you work with and where you work. However, it also comes with additional administrative tasks, such as tax.
We’ve put together a checklist of things you should consider as a sole trader operating from a co-working space:
1. Employee or contractor?
Determine whether you’re an employee or contractor. You can use our guide for understanding the difference between a employees and contractors to help you.
2. Understand tax terminology for sole trader contractors
As a contractor, in order to understand tax related acronyms and key terminology, you may need to comply with registrations including ABN, GST and more. Read our key tax terminology definition guide.
3. Organise an ABN
If you don’t already have one, you should register for an Australian Business Number (ABN).
4. Register for GST
If you’re earning more than $75,000 annually you’ll also need to register for and pay Goods and Services Tax (GST) by lodging regular Business Activity Statements (BAS).
Complete your GST registration with Airtax.
5. Understand which business expenses can be claimed as a tax deduction
If working from a co-working space, even if it’s just for a few days each week, associated costs may be able to be deducted for tax purposes - this can include membership fees, stationery costs, and the cost of employing another person both short term and long term.
Other costs such as phone, internet, advertising, and self education costs may also be eligible.
6. Understand which travel expenses can be used as a tax deduction
If required to travel significant distances to visit clients, it’s likely these costs could be claimable. You cannot, however, claim home-to-work or work-to-home travel. See our guide for managing car related expenses.
7. Understand how to apportion expenses for deductions
All deductions must be correctly apportioned between business and private use based on actual usage.
8. Understand what cannot be claimed as a deduction
You cannot claim expenses that are either unrelated or only loosely related to your line of work. This includes clothing such as suits or dresses, entertainment expenses such as business lunches or sporting events.
9. Manage appropriate documentation
Keep records of your expenses. There are mobile apps for example, which will allow you to keep track of receipts, such as Squirrel Street.