In recent times there has been a lot of emphasis on working at home. People have been encouraged to do this no matter what type of business they are in or whether they have ever done it before. For some, it can be a very strange experience, but for others, it may be a revelation. Many people will see just how nice it is to work in a familiar environment and may think about opportunities ahead. If you've decided to take more control of your future and operate a new business from your home, what do you need to bear in mind from a tax perspective?
Due to the rapid onset of technology and the meteoric rise of the Internet, it is now possible to run a wide variety of different businesses from your home. You could be a consultant in your field of expertise or a service provider who takes advantage of the many online payment solutions in the market.
Start As You Mean to Go on
Indeed, there will be a lot to take into account in the early days, but it is essential to handle your tax affairs correctly as you proceed. You may not be aware, but you can now include several items on your return to reduce the amount of tax that may otherwise have been due to the ATO.
Space and Utilities
For example, you will be able to claim a certain amount of money against your rent or mortgage fees. If you use one of the rooms in your house as your business office, then you should apportion the size of that room as a percentage of the home's total square footage. You can then apply that percentage to your monthly mortgage or rent payment, multiply it by 12 and deduct that amount from your tax bill. Similarly, you can add up all your utility bills, including electricity, water, gas or Internet, and you can apportion an amount as a deduction.
If you have to buy any equipment to help you start, such as a computer or printer, you can probably claim the entire amount of that expense in your first year. Typically, you will need to depreciate larger expenditure over several years and claim accordingly, but the ATO will usually waive this requirement in your start-up year.
Don't forget to claim the cost of education if you need to enrol in a course to improve your skills. So long as the class is directly related to your chosen business, you can deduct all the fees, such as the cost of books and other necessities.
Bear in mind, however, that it is crucial to get all of this information right so that you do not run into problems with the authorities. This is why you should enlist the services of a tax agent from day one, just in case.
To learn more, contact a tax agent.Share