Do you need an ABN to work? Learn what it means.

Lots of people (especially international students) are asked to get an ABN (Australian Business Number) if they want to do some specific work. But, what that means? What should I know when I get an ABN?

Well, although some people are lately having the ABN refused, getting an ABN is not that difficult. It can be done filling a form online, is free and you can do it yourself. However as the decision of give you the ABN or not is based on the information you supply, some people prefer to pay to a tax agent or accountant to help them with this process. 

Nevertheless, keep in mind that although it is an easy process, this implies some responsibilities and advantages that most international students who get an  ABN do not know.

When an individual gets an ABN (without constitutes a partnership or company), it means he/she became "Sole Trader", and it, as everything in life, has advantages and disadvantages:

Benefits - advantages
-More autonomy in the job.

-Be able to delegate the job to others.

-Get days-off without much problem.

-If you are organized, you could pay less tax.

Responsibilities- disadvantages

- You have to issue invoices for your services.
- You don't get paid holidays

- You don’t get payment on days-off or if you are sick and can't do the job.

- Normally you have to pay the taxes together at the end of the financial year.

- You get other taxation responsibilities due to you are a business.

- You don’t have contributions to superannuation.

Looking into it, I would like to point at this stage that some of the disadvantages can be turned around with the correct decisions through the year. For example, as a Sole trader you have to pay taxes over the same income tax rates for individual taxpayers, however, you normally have to pay it at once and this affect your finances. Nonetheless, you have the option to pay a small amount periodically and reduce the financial impact at the end of the financial year.

On the other hand, as a sole trader you normally incur in some expenses that can be deducted from your tax, so if you are organized and keep all the supporting paperwork, you can make the most of it and pay less taxes.

Additionally, I would like to highlight the importance to know the responsibilities you get, so you avoid troubles or a fine in case ATO choose you for an audit. (Check this link for more information: https://www.ato.gov.au/business/starting-your-own-business/choosing-your-business-structure/Sole-trader/)

To conclude, if you are wondering how you could reduce your taxes and understand better the responsibilities you get, don’t wait until the end of the year, contact us and we may be able to help you, either keeping all your day to day transactions correctly recorded and ready for the accountant or tax agent to do the claim when the financial year ends; or giving you a personalized training about how to keep your records correctly and understand better how small business bookkeeping works.

Keep in mind that we don’t charge a fortune for our services. We offer bookkeeping services from as little as $25 a week, accounting software from $8/month and additionally, if you need assistance with your tax return as an individual or sole trader, then In Action Services Group is acting as a collection point for tax returns for Student Tax Buddy.

And even better, our services can be deducted from your taxes as a business expenses.



Contact Us:

Facebook page: https://www.facebook.com/inactionbookkeeping/


Email: bookkeeping@inaction.com.au