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Newbie

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Hi There,

 

I have a question regarding working full time and being payed by an employer, while running a small business on the side. I'm currently registered as a "sole trader", however with my full-time salary, will I be seen to be of a higher earning bracket for any income through the business on the side? Even if I am not taking income from the business (and investing it all back into the business). 

 

Thanks in advance! 

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ATO Certified

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Hi @DrewColl,

Thanks for getting in touch!

If you're a sole trader - that is, you own your small business yourself - then you'll need to keep detailed records that show the income you're bringing in and allowable expenses you can claim as deductions.

When it comes to tax time, you'll report your income from salary and wages in one section of your return, and complete the net income or loss section for your business income. Information from all sections of your return will be added together, and we'll calculate your total tax payable based on your total taxable income. If you've had enough tax withheld to cover your tax payable, you won't need to pay any more (or may receive a refund); if you haven't had enough tax withheld, you'll receive a bill.

The Net income or loss and business and professional items sections allow you to tell us how much you've spent setting up and running your small business. If it turns out you've spent more setting up your business than you've earned, you'll add the business loss to the rest of your income and pay tax on the reduced taxable income.

 

If you have further questions, you can phone us on 13 28 61 between 8am - 6pm, Monday to Friday to speak with an operator.

 

Thanks, JodieH.

 

 

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Devotee

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Hi there @DrewColl

Welcome to the ATO online community.

As soon as you start up your business, you need to plan for how you will pay the tax you will owe each year when you lodge your tax return.

Even though you renvesting income back in to the business there may tax implacations on the income earnt, the tax witheld from your employment may not be enough to cover your total taxable income.

 

In your first year of business, you can stay on top of your obligations by:

  • making tax pre-payments into your tax bill account
  • putting money aside for your expected tax bill
  • voluntarily entering into instalments

This page is very helpful - https://www.ato.gov.au/Business/Starting-your-own-business/

 

I also recommend https://www.business.gov.au/Planning, the webisite Business.gov.au, I am sure you will find very useful information.

Regards, Tracey

 

 

 

Please note this is my personal view; I’m an ATO employee who chooses to help out here in my own time

Best answer

ATO Certified

Community Support

Replies 0

Hi @DrewColl,

Thanks for getting in touch!

If you're a sole trader - that is, you own your small business yourself - then you'll need to keep detailed records that show the income you're bringing in and allowable expenses you can claim as deductions.

When it comes to tax time, you'll report your income from salary and wages in one section of your return, and complete the net income or loss section for your business income. Information from all sections of your return will be added together, and we'll calculate your total tax payable based on your total taxable income. If you've had enough tax withheld to cover your tax payable, you won't need to pay any more (or may receive a refund); if you haven't had enough tax withheld, you'll receive a bill.

The Net income or loss and business and professional items sections allow you to tell us how much you've spent setting up and running your small business. If it turns out you've spent more setting up your business than you've earned, you'll add the business loss to the rest of your income and pay tax on the reduced taxable income.

 

If you have further questions, you can phone us on 13 28 61 between 8am - 6pm, Monday to Friday to speak with an operator.

 

Thanks, JodieH.

 

 

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