Sorting Out Your Accounts

How Can Sole Traders Benefit From Hiring a Taxation Expert?

by Lydia Washington

The Australian taxation system provides for people working on their own with the status of 'sole trader'. This is designed to make the process of calculating and paying tax as simple as possible for people like freelancers and tradesmen. As such, many people who operate as sole traders think that they will not benefit from tax advice. However, the reverse is so. These days, large numbers of sole traders hire tax accountants to help them work out exactly how much in taxes they are liable to pay. Why might you also be able to take advantage of the expertise that tax accountants have?

Save Time

One of the major hassles about working out your taxes and then declaring it to the Australian Taxation Office is that it is so time-consuming. You have to work out your exact income from work as a sole trader, and this needs to be distinguished from any employed income you have. Equally, your business expenditure needs to be calculated and kept separate from your personal spending. Sometimes the two can overlap, which means you need to do your research on what is an allowable expense and what is not. All this eats into your earning time, of course. With a tax accountant doing the work for you, however, you can get on with doing what you do best!

Save Money

Everyone wants to save money. Any business — whether they run on a sole trader status or not — can do with pushing down on needless expenditure. And yet, you may be paying more in taxation than you need to. Of course, tax accountants are not there to tell you how to avoid paying tax. They can help you to stop paying tax that you don't need to, though. Many sole traders don't realise all of the tax allowances that they could — quite legally — be taking advantage of. As such, the fees your accountant charges for their work can often be covered by the amount of savings they help to produce.

Avoid Errors

Many sole traders make mistakes with their tax declarations. This is understandable given that most self-employed people don't also happen to be experts in Australian tax law. That said, any errors you make are deemed to be your fault. They can result in big fines and lengthy investigations into your tax affairs that might go back years. To avoid this, the best approach is to hire a knowledgeable professional who can ensure you make the right declarations on time.

For more information, speak with a tax accountant