Speaker 1: Hello, my name's Santasha Nabananga Bamblet. I'm a proud yr
Speaker 1: the Order KERNI Whoalbury and a waddery woman. And before
Speaker 1: we get started on She's on the Money podcast, I
Speaker 1: would like to acknowledge the traditional custodians of the land
Speaker 1: of which this podcast is recorded on a wondery country,
Speaker 1: acknowledging the elders, the ancestors and the next generation coming
Speaker 1: through as this podcast is about connecting, empowering, knowledge sharing
Speaker 1: and the storytelling of you to make a difference for
Speaker 1: today and lasting impactful tomorrow.
Speaker 2: Let's get into it.
Speaker 3: She's on the Money, She's on the Money.
Speaker 4: Hello, and welcome back to the Business Bible. I am
Speaker 4: Victoria Devine, the owner of several successful businesses.
Speaker 2: It's not gonna get less weird saying that, is it?
Speaker 4: Jess and I am joined by one of the hardest
Speaker 4: working side hustlers I know, Miss jessic ricci Ah.
Speaker 2: How kind, very exciting, nice lady. You are a very
Speaker 2: nice lady, pumped it into episode two of the Business Bible.
Speaker 4: I am also very excited because today is arguably one
Speaker 4: of these sexiest topics. Jessica, we could talk about we're
Speaker 4: going to set up your small business books.
Speaker 2: Jessica, I feel like you're using the term sexy very loosely.
Speaker 2: Oh no, no, I think it's really sexy.
Speaker 4: Today we are talking tax we're talking avns and bank accounts.
Speaker 2: Was that sexy talk? Don'ty to me? Tell me more.
Speaker 4: In all seriousness, though, Jesse, this is the one thing
Speaker 4: that I hop on and on and on to people
Speaker 4: saying I'm going to start a small business or I've
Speaker 4: got a small business. Please set up your books properly
Speaker 4: from the very beginning, to ensure that everything runs smoothly
Speaker 4: and we don't get into any trouble with the ATO,
Speaker 4: because there is honestly nothing less sexy than having the
Speaker 4: ATO knocking on your door, right Like it's the one
Speaker 4: thing that I just go, No, just go and get
Speaker 4: another bank account, Just go and set it up separately,
Speaker 4: get an ABN. Stop underestimating the power of your business,
Speaker 4: like yeah, you would hear it all the time where
Speaker 4: people are like, oh no, I can't be bothered, Like
Speaker 4: I don't do that much work, Like you could just
Speaker 4: be an influencer on the side, you know, making a
Speaker 4: couple of hundred dollars, or you could you know, have
Speaker 4: like and I always use a candle business because I
Speaker 4: kind of like feel like that's scalable. It could be
Speaker 4: as big as glass house or like a coyer or something,
Speaker 4: or it could just be something that you like spend
Speaker 4: sundays like pouring candles because you really like it and
Speaker 4: sell them to friends and family. Yeah, but it's one
Speaker 4: of those businesses.
Speaker 2: Where you might go, it's not worth it. No, it
Speaker 2: is worth it.
Speaker 4: And the second you say it's not worth it, you're
Speaker 4: not believing in your business. And so having set up
Speaker 4: books is going to be the stable foundation of making
Speaker 4: sure that your business is successful, which Jessica is very sexy.
Speaker 2: That does sound very sexy to me. I think it's
Speaker 2: probably confusing to a lot of people, which is why
Speaker 2: they don't often do it properly. But as someone who
Speaker 2: has kind of been through it, I think there is
Speaker 2: nothing worse than getting to tax time and being like,
Speaker 2: oh my god, everything's everywhere. So if you set it
Speaker 2: up now, you're saving yourself all of that stress in
Speaker 2: six or twelve months time. And you too will agree
Speaker 2: that it is very sexy. Promised, I promise.
Speaker 4: And it can be super complicated, right, so we'll try
Speaker 4: and make it as easy and clean as possible today,
Speaker 4: starting with getting an ABN. Jessica, you have one, I
Speaker 4: do a big dog. And ABN is what is called
Speaker 4: an Australian business number, which is a unique number that
Speaker 4: identifies your business to the government and also to your consumers.
Speaker 4: It's absolutely necessary for tax purposes, for invoicing and at
Speaker 4: times for your banking.
Speaker 2: Okay, I have an ABM because I got one as
Speaker 2: a kid, because I modeled for Target. Once I modeled
Speaker 2: for Target one. Yeah, I was in a big post
Speaker 2: to my mum. Tried to take it home. They wouldn't
Speaker 2: let it. So I actually would let it. I mean,
Speaker 2: just who is this crazy woman? Please get act you
Speaker 2: get out of the kid section. That's very fair. But
Speaker 2: I had one set up and I think I just
Speaker 2: had to renew it. I didn't actually start from scratch.
Speaker 2: So tell me a little bit more, Okay.
Speaker 4: So it is really important because when we actually talk
Speaker 4: about an ABN, it's not as simple as just like
Speaker 4: trotting down the road and picking up your ABN. I mean,
Speaker 4: it is that simple online you just apply for it,
Speaker 4: but there are actually several different options when signing up
Speaker 4: for an ABN. Yeah, and I feel like lots of
Speaker 4: people get analysis paralysis. So let's go through the three
Speaker 4: main types today. So the first is not having an
Speaker 4: ABN at all, so no bueno. This is when you
Speaker 4: choose not to register your business with the government, and
Speaker 4: this is only for small businesses that turn over less
Speaker 4: than seventy five thousand dollars per financial year, so it
Speaker 4: means that you're kind of functioning under your personal name completely.
Speaker 4: It's perfect for side hustles or if you want to
Speaker 4: make a bit of money on the side and you
Speaker 4: aren't expecting the business to grow and you don't really
Speaker 4: want it to grow.
Speaker 2: You're just like, oh, I did some.
Speaker 4: Gardening, and you know, one year, I just was like
Speaker 4: trying to smash down debts, and so I offered my
Speaker 4: gardening services for you know, the period over Christmas, and
Speaker 4: I'll never do it again. But I did accept business income,
Speaker 4: and obviously I wanted to make sure that that was
Speaker 4: all clean and I paid tax on it and stuff.
Speaker 2: So that could be a good example.
Speaker 4: You might also be, as I said before, a mini
Speaker 4: influencer doing a few brand deals here or there, or
Speaker 4: maybe you're like side hustling as much as Jess does,
Speaker 4: and you're renting your clothes out on the side, So
Speaker 4: you might have like a few dresses listed on the
Speaker 4: vault or something that is not a hobby that is
Speaker 4: actually something that you need to pay tax on it.
Speaker 2: And I think there are a lot of people who
Speaker 2: are quite flexible about tax.
Speaker 4: I'm not one of those people because I'm kind of like,
Speaker 4: do it right, do it once, don't get in trouble,
Speaker 4: full stop, end of story. Whereas I have heard historically
Speaker 4: people go, oh, well, it could fall under being a
Speaker 4: hobby if you're earning less than five thousand dollars a
Speaker 4: year from it. And I look at that and I
Speaker 4: just go, yeah, but like, you're trying to generate additional income.
Speaker 4: It's not like I just sold a chest of draws
Speaker 4: on Facebook market plas once off, Like you fully set
Speaker 4: up this like business structure online to generate income from
Speaker 4: your wardrobe. Yeah, And so like I'm a little bit
Speaker 4: more cut and dry, and I go, no, you definitely
Speaker 4: need to be doing tax on that. But the important
Speaker 4: thing there is talk to your accountant if you're worried,
Speaker 4: because obviously I can't give you personal advice, but essentially
Speaker 4: you could just be selling some goods that you create
Speaker 4: yourself knowing that it's just never going to exceed seventy
Speaker 4: five thousand dollars a year, so like it's kind of,
Speaker 4: you know, the gateway to having an ABN.
Speaker 2: Yeah. Interesting addendum. If you're providing a service to somebody,
Speaker 2: and I only know this because it happens to me once,
Speaker 2: if you do not have an ADM, often the company
Speaker 2: or the person paying you will withhold the highest tax rate.
Speaker 2: Like typically you would be taxed at your marginal tax rates.
Speaker 2: So for example, if you were being taxed, it is
Speaker 2: it twenty three twenty four? What's the thirty two and
Speaker 2: a half percent?
Speaker 1: Oh?
Speaker 2: Really tax rate? I would like to swap it to
Speaker 2: twenty three. You've just like flipped. It's just not wrong,
Speaker 2: just a little on the wrong side of the tracks. Yeah,
Speaker 2: I like to do that. Yeah, we could drop it,
Speaker 2: im me up to that. If you were earning under
Speaker 2: the threshold, your business income would be taxed if you
Speaker 2: were trading at like that same tax, right, But if
Speaker 2: you're supplying to somebody else, they will often withhold the
Speaker 2: top rate of tax, so it might be high, so
Speaker 2: you end up paying more tax than you would.
Speaker 4: It come a little bit complicated, but also good to
Speaker 4: know keeping tip bit on the side because not having
Speaker 4: an ABN, obviously you kind of go, oh, well, I'm
Speaker 4: never gonna make more than ten grand from this.
Speaker 2: Little side hustle.
Speaker 4: However, it also leaves you open legally to a lot
Speaker 4: of like impact, if that makes sense. So you know,
Speaker 4: if something happens, just your butt's on the line. Yeah,
Speaker 4: like it's you personally, and I just go oh, like,
Speaker 4: if I'm starting to provide a product or a service,
Speaker 4: like I want some level of protection. And also I
Speaker 4: just like things to be quite clean. Even if you
Speaker 4: don't have an ABN, I would still be looking at
Speaker 4: having your own bank accounts and making sure that your
Speaker 4: business income is separate from your personal income, just.
Speaker 2: To make things easy for you.
Speaker 4: So don't think that you're going to get out of
Speaker 4: me giving you a sexy banking structure just because you go.
Speaker 2: No ABN, no worries.
Speaker 4: Yes, no ABN, more worries, more worries, more worries.
Speaker 2: Tell me about the next category, which is actually the
Speaker 2: one that I fall into. Okay, So this is sole trader.
Speaker 4: So this is for a business of one person or
Speaker 4: someone likely to pay for contractors or freelancers. So look
Speaker 4: at the future of your business. Do you see it
Speaker 4: just being you? Are you just always going to freelance?
Speaker 4: This option is free, sexy, and can be done through
Speaker 4: the ATO website and only through the ATO website, And
Speaker 4: it can be done really quickly and easily. When you're
Speaker 4: googling set up ABN. Please do not clip any of
Speaker 4: the links that.
Speaker 2: Are like this proversion will help you. No, don't do it.
Speaker 2: It's really easy.
Speaker 4: It's really easy, and it's free to do. Don't pay
Speaker 4: some plub who's trying to scare you. Really literally take
Speaker 4: advantage of you. Also on that every year, Yes, I
Speaker 4: get multiple of these letters in the mail from people
Speaker 4: going your ABN's up for renewble or something of the like. Reader,
Speaker 4: Is it from the ATO. If not, it's a random
Speaker 4: marketing company who has searched your ABN on the ABN website.
Speaker 4: My address is on there, like my business address, like
Speaker 4: so that people can contact me. That's how business works.
Speaker 2: But they send a.
Speaker 4: Little marketing email that looks like an invoice, ah, and
Speaker 4: they go just you know, scam this QR code and
Speaker 4: pay us and we'll get it all sorted out for you.
Speaker 2: That's awful. Yes, it is a trap. It is a scam.
Speaker 2: Oh my god.
Speaker 4: So we only talk one on one with the ATO.
Speaker 4: There will never be a third party unless it is
Speaker 4: your nominated third representative, which will probably be your accountant.
Speaker 4: So if it is not coming directly from the ATO,
Speaker 4: and it is, you know, from another company, run yeah,
Speaker 4: run because they're scary.
Speaker 2: But just you're a soul trader.
Speaker 4: Why did you pick sole trader for your personal circumstances
Speaker 4: and not just having no abn oh.
Speaker 2: I think think it was kind of I was invoicing companies.
Speaker 2: They were kind of going, where's your abien, and I
Speaker 2: was like, I don't have one for you to put
Speaker 2: into your system, and so you have a look and
Speaker 2: a lot of the times companies do need them to
Speaker 2: set up like purchase orders and things on their end,
Speaker 2: and that was when I was like, oh, I need
Speaker 2: to renew the one. And thankfully I had one that
Speaker 2: was existing.
Speaker 4: And that's just as easy to renew as it is
Speaker 4: to set up. Honestly, you just need some identification. Yeah,
Speaker 4: let the government know what the purpose of the business
Speaker 4: is and hits abmit, like it's so easy.
Speaker 2: It was so easy, And I think it also made
Speaker 2: me feel a little bit legitimate too.
Speaker 4: Like she's got an ABN on her invoice.
Speaker 2: Yeah, Like I felt like a proper person that was
Speaker 2: actually trading goods and services, you know. I felt like
Speaker 2: it just made me a little bit more legit, which
Speaker 2: might be silly.
Speaker 4: But no, no, no, no, I think it's really important to
Speaker 4: feel legit when you're doing your business as well. I
Speaker 4: know it can be you know, a little bit fluffy
Speaker 4: because people will go, well, you know, if one person
Speaker 4: ends ten thousand dollars with no ABN, and you're saying
Speaker 4: that having an ABN, I'm still just going to earn
Speaker 4: the same amount doing the same thing, you might go, well,
Speaker 4: what's the point. Yeah, the point can sometimes honestly be legitimacy.
Speaker 4: As somebody who who hires a lot of freelancers and
Speaker 4: sole traders to do like you know, random content. Sometimes
Speaker 4: sometimes we'll do events. I want you to have an
Speaker 4: ABN because protects me. It means that I am, you know,
Speaker 4: paying an invoice directly to an actual business that can
Speaker 4: be traced. Everything's clean, Yeah, And so I prefer to
Speaker 4: work that way. So often it could actually be the
Speaker 4: difference between you being picked and another sole trader being picked.
Speaker 2: So I think that it's important.
Speaker 4: To just set it up to make it as easy
Speaker 4: as possible for your consumers and your clients as well,
Speaker 4: because the less friction during that process, promise, the more
Speaker 4: money will come in your door.
Speaker 2: Yeah, one hundred. There is a third There is a
Speaker 2: third option, and that's what I have.
Speaker 4: I have a company set up, So a company is
Speaker 4: a legal entity in its own right, unlike a soul trader,
Speaker 4: So there's a bit of protection for you and your
Speaker 4: personal assets, obviously having a business in between them, which
Speaker 4: to me sexy because I didn't work this hard to
Speaker 4: you know, have something happen in the future. Obviously, like
Speaker 4: open and honest about it. It's not like I'm worried
Speaker 4: that something's going to happen. But I don't really want
Speaker 4: my house to be at risk when I've got a company,
Speaker 4: Like you know, if you're earning ten thousand dollars from
Speaker 4: a side hustle, that to me is quite different to
Speaker 4: my entire livelihood being at risk, and like I'm responsible
Speaker 4: for a lot of people's incomes.
Speaker 2: Yeah, so I just want that protected. The buffer.
Speaker 4: I'm sure Jess, you feel a lot more protected knowing
Speaker 4: that there's a business structure there, there's something legit set up.
Speaker 4: The only way to employ full time, part time or
Speaker 4: casual stuff is to have a registered company. So you
Speaker 4: can't just be a sole trader and hire someone. You
Speaker 4: actually have to set up your entire business structure differently
Speaker 4: to hire your first employee, which, if you're looking at it,
Speaker 4: you know, in your circumstance, just I doubt you're ever
Speaker 4: going to hire an employee because of the way that
Speaker 4: you work and what your plans are. But like what
Speaker 4: if you were like, oh, actually, I want to take
Speaker 4: content creation full time.
Speaker 2: Like I'm going to take this really legit.
Speaker 4: One day, my personal income is going to outweigh the
Speaker 4: amount of income that I make in my full time job,
Speaker 4: and I'm going to quit. Yeah that's exciting. What happens
Speaker 4: when you quit, Jess, you might need to hire a
Speaker 4: personal assistant, you know, legit. If you've taken this full time,
Speaker 4: you might want to expand and have that support, So
Speaker 4: you need to think about this could be the same.
Speaker 4: My favorite example the candle business, yeap. It might mean
Speaker 4: you pouring candles on a Sunday afternoon because it's really therapeutic.
Speaker 4: One day you go viral and TikTok exciting money win
Speaker 4: like such a business win. We'll talk about going viral
Speaker 4: and TikTok and a whole episode one day.
Speaker 2: But you go viral, everyone's placing candle orders. You've only
Speaker 2: got two hands. You've only got two hands. How do
Speaker 2: you pour all the candles? Exactly? It just gets very stressful, Jessica.
Speaker 4: So we need to think about what could happen in
Speaker 4: the future. But it is an investment, so it does
Speaker 4: cost between four hundred and seventy four and five hundred
Speaker 4: and seventy six dollars depending on the business that you
Speaker 4: are registering, And it does come with a bit more
Speaker 4: responsibility in that you need to do a bit more reporting.
Speaker 4: So you're likely going to have to submit quarterly documentation
Speaker 4: to the ATO about what's going on with your business,
Speaker 4: how much you've earnt, how much tax you are anticipating
Speaker 4: yet to pay at tax time. And something that I do,
Speaker 4: which a lot of small business owners do, is pay
Speaker 4: what's called bas and that's is essentially paying your tax
Speaker 4: in advance, because there is nothing more stressful as business increases, right,
Speaker 4: even as business doesn't increase, like jess how's tax time
Speaker 4: as a small business owner. Not very fun, right, But
Speaker 4: if you're paying BAS, you're breaking up the tax that
Speaker 4: you're paying throughout the year. And then tax time comes
Speaker 4: and my accountant sits me down and we kind of
Speaker 4: do like an audit of like what have you paid?
Speaker 4: What are things that we could now claim, what are
Speaker 4: things that you might have missed out on, and what
Speaker 4: are things that you still have to pay for?
Speaker 2: And my tax time, like.
Speaker 4: Come June thirty, I look at it and I go, okay, well,
Speaker 4: I'm not going to owe thousands and thousands of dollars.
Speaker 4: You know, there's a bit of cleanup going there. So
Speaker 4: like BAS, it's a business activity statement if I didn't
Speaker 4: say that before, but BAS is kind of like predicting
Speaker 4: based on your past performance what your future tax will be,
Speaker 4: so that I don't end up in a sticky situation
Speaker 4: where I have a heap of tax owing all at
Speaker 4: one time.
Speaker 2: Yeah, and that's way all you can ask for, is that? Okay?
Speaker 2: So question, Yes, if I'm currently a sult trader, and
Speaker 2: I've picked soul trader because I think that's going to
Speaker 2: work for me, I am just working by myself, doing
Speaker 2: my thing, doing what you're doing now, exactly right. What
Speaker 2: happens if I do get to the point, like you said,
Speaker 2: in a couple of years where maybe I do leave
Speaker 2: my full time job and I do need somebody to
Speaker 2: come on and help. Can I change?
Speaker 4: Of course you can, although it does get a little
Speaker 4: bit difficult changing. So that's why I always recommend people
Speaker 4: you know you go.
Speaker 2: It could be four hundred and fifty.
Speaker 4: Bucks like to set up the entity to begin with,
Speaker 4: why bother. Yeah, sometimes it's worth spending the money on
Speaker 4: the structure to begin with if that could even be
Speaker 4: a possibility, and if it doesn't become a possibility, you
Speaker 4: just have more projections.
Speaker 2: That's not the end of the world. Please don't get
Speaker 2: me wrong.
Speaker 4: I totally understand that it's a privilege to be able
Speaker 4: to afford literally everything. As somebody who started their business
Speaker 4: by making although their graphic design of Microsoft Office and
Speaker 4: screenshotting it go, I get it. But it can be
Speaker 4: really difficult to change from a sole trader ABN to
Speaker 4: a company ABN down the track, So I'd really suggest
Speaker 4: just get it right the first time. But it's not
Speaker 4: just the difficulty in the paperwork. It can actually be
Speaker 4: costly to set it up and change it because you're
Speaker 4: going from a business that you know as a sole
Speaker 4: trader has value into another company, and structuring it actually
Speaker 4: can be a little bit more complex than what it seems.
Speaker 4: So obviously you're going to want to weigh up your
Speaker 4: decisions financially, time wise and work out which one is
Speaker 4: the right one for you, because obviously moving to a
Speaker 4: company is expensive, not to overload you, moving to a
Speaker 4: company is expensive, But who then owns the company? Yess
Speaker 4: So it's not just going, oh, well, maybe I'll own
Speaker 4: your company, just so that's not the question I'm asking.
Speaker 4: So my personal structure, and this is why I love
Speaker 4: the Business Bible because I can just tell you what
Speaker 4: I do. I'm not saying that this is the right
Speaker 4: thing for you, this is the right thing for me,
Speaker 4: but I when I set up my companies at the
Speaker 4: same time established a family trust. So my family trust
Speaker 4: owns my businesses, not me personally. You personally can own
Speaker 4: a company, but you need to maybe spend the couple
Speaker 4: of one hundred dollars sitting down with an accountant going well,
Speaker 4: if I'm going to set up this company, what is
Speaker 4: the best way to protect me, what is the best
Speaker 4: way to own this do I own it personally? You
Speaker 4: can totally own it personally. That's fine, that's a really
Speaker 4: simple structure. But your account might turn around and be like, well, actually,
Speaker 4: what are your plans for the future. So one of
Speaker 4: the reasons why we made this decision is because in
Speaker 4: the future, before my business made any money, I was like,
Speaker 4: you know what I would love for the structure. You know,
Speaker 4: it's kind of aspirational. It gave me a lot of
Speaker 4: motivation as well. I'd love to be able to buy
Speaker 4: an investment property, and I would love to be able
Speaker 4: to put that investment property in a trust so in
Speaker 4: the future I can distribute the dividends of that investment
Speaker 4: property down to my family members. Could I afford an
Speaker 4: investment property at that point in time, No, Jessica, The
Speaker 4: answers no, because I was in debt when I started
Speaker 4: my business.
Speaker 2: As I said, did you even have one property at
Speaker 2: the time?
Speaker 1: No?
Speaker 2: Hype dream, hype dream.
Speaker 4: But we want to make sure that we're setting ourselves
Speaker 4: up for success. And that's one way to additionally protect yourself.
Speaker 4: That you really should have the conversation with an account
Speaker 4: and go, well, what does that mean for me? Like,
Speaker 4: you know, jess you might be hiring your first assistant
Speaker 4: or content creator or whatever you're doing.
Speaker 2: But what next?
Speaker 4: Where does the ball roll? Yeah, so I think it's
Speaker 4: important to understand one.
Speaker 2: Hundred percent to switch gears. Ever so slightly, I just
Speaker 2: want to go back a few steps because earlier we
Speaker 2: were chatting about the seventy five thousand dollar threshold, and
Speaker 2: so if you're earning less than seventy five thousand dollars,
Speaker 2: you're all gucci. But what happens when you're earning more?
Speaker 2: Because that's what we all want, right like we want
Speaker 2: to be earning heat.
Speaker 4: We're going to become so rich, we're going to be
Speaker 4: rich af So as soon as your gross income hits
Speaker 4: seventy five thousand dollars, gross income is total earnings prior
Speaker 4: to tax or deductions. So when you look at that number,
Speaker 4: I think it's gross because that's what you could have
Speaker 4: taken home but you had to pay tax, so fun
Speaker 4: so and then net is what you captured in the net.
Speaker 4: That's really big holes, Jessica. So you're not going to
Speaker 4: forget that now, but you need to register and pay
Speaker 4: what's called goods and services tax. Summer finance Girly at heart,
Speaker 4: if you send me an invoice, Jess, and you're not
Speaker 4: charging the GST immediately, I know how much your business
Speaker 4: turnover is true, I know you're earning less than seventy
Speaker 4: five thousand dollars. Yeah, okay, so this is again not
Speaker 4: personal advice. Do you know what I was doing before
Speaker 4: I earned more than seventy five thousand dollars? Yes, what
Speaker 4: I was still charging your GST. I was paying GST
Speaker 4: because you can pay GST irrespective of what you earn
Speaker 4: its choice up until seventy five thousand dollars. After seventy
Speaker 4: five thousand dollars.
Speaker 2: It's compulsory. Yeah.
Speaker 4: Before seventy five thousand dollars, they're like, you don't need
Speaker 4: to do this, you could if you wanted to. Me
Speaker 4: earning ten thousand dollars, I'm like, I want to because
Speaker 4: do you know why?
Speaker 2: It's kind of like left pocket, right pocket.
Speaker 4: I'm charging you just ten percent GST gets added to
Speaker 4: your invoice. I put that ten percent to the side,
Speaker 4: and I just pay it to the government. So I'm
Speaker 4: not losing money by charging GST. But I knew that
Speaker 4: by sending out an invoice that charged GST, people would
Speaker 4: immediately go, oh, she's done this before. Yeah, she's just
Speaker 4: been earning a fair bit.
Speaker 2: It's that professionalism thing again, a little bit sneaky. Should
Speaker 2: you do it?
Speaker 4: I don't know you do, you Booth, But I did
Speaker 4: and it made me feel powerful.
Speaker 2: Af I love that for you.
Speaker 4: So GST is essentially an added ten percent of the
Speaker 4: product or service that you are selling, which has to
Speaker 4: be paid to the tax office. It's not your money,
Speaker 4: as I said before, it's left pocket, right pocket. Like,
Speaker 4: it's not going to cost your business more unless you
Speaker 4: somehow have not a clean banking system and you forget
Speaker 4: about the ten percent and then you allocate it to
Speaker 4: something else and then come tag time, they're like, hey,
Speaker 4: by the way, you've got to pay a GST And
Speaker 4: you're like, wait what, I don't have that money right now.
Speaker 2: Yeah, which is.
Speaker 4: Why we want clean banking systems, Jessica. But it has
Speaker 4: to be paid, and you can't just be having no ABN.
Speaker 4: You must have an ABN at this stage. So the
Speaker 4: second you get over seventy five thousand dollars, if you
Speaker 4: had no ABN, favorite's time to get an ABN.
Speaker 2: Like, it's non.
Speaker 4: Negotiable at that point because the ATO looks at it
Speaker 4: and goes, this is pretty legit, Like, seventy five thousand
Speaker 4: dollars is a lot of money that we've let you earn.
Speaker 4: So once you hit seventy five thousand dollars, your job
Speaker 4: in business now has two rules. First running the business
Speaker 4: and second collecting tax for the tax office.
Speaker 2: Our tax man's sounding pretty happy about that. He's a
Speaker 2: nice guy. I promise. What does happen if we are
Speaker 2: maybe not keeping a close enough eye on our bank accounts,
Speaker 2: maybe we haven't structured it in the best way. Definitely
Speaker 2: not speaking for experience, but what happens if you miss
Speaker 2: the seventy five thousand dollars milestone and you are late
Speaker 2: to register for GST, You're probably gonna have a meltdown? Yep.
Speaker 4: First, probably gonna just be a bit anxious, a little
Speaker 4: bit stressy.
Speaker 2: We're not gonna let that be an option.
Speaker 4: I would register for GST when setting up my ABN,
Speaker 4: just being real clean from the very start, to be
Speaker 4: honest for a few good reasons. So obviously, as I
Speaker 4: said before, once you start charging GST, that's going to
Speaker 4: be an extra ten percent for your clients or customers
Speaker 4: to pay. And if you start prices including that ten percent,
Speaker 4: you don't have to re talk to your clients, Jess.
Speaker 2: True.
Speaker 4: So like you get this seventy five thousand dollars, you're partying.
Speaker 4: You've probably gone out with your part or your friends
Speaker 4: have some champagne.
Speaker 2: Like, look at my business, I'm killing it. Yeah, Now
Speaker 2: you have to.
Speaker 4: Go to your clients and be like, by the way
Speaker 4: prices are increasing ten percent, you don't get more. Actually,
Speaker 4: I just have to start collecting money for the ATO.
Speaker 2: I didn't think of.
Speaker 4: Your client's not gonna love that, yeah, not because they're
Speaker 4: not happy for you, but like, no one wants to
Speaker 4: pay more money. Yes, so if you just did it
Speaker 4: from the start, there aren't any price hikes once you
Speaker 4: suddenly become qualified to pay for that.
Speaker 2: Yeah. And I like that, yeah, because I like.
Speaker 4: Being paid for what you're worth. I mean, if we're
Speaker 4: asking for a ten percent pay rise, it's gonna be
Speaker 4: for Jess, not for the ATO.
Speaker 2: Right.
Speaker 4: The second thing is again makes your business look more
Speaker 4: legit when you charge for GST, and when you don't,
Speaker 4: it's very clear that you're making less than seventy five
Speaker 4: thousand dollars.
Speaker 2: I mean maybe not everyone looks at it the same
Speaker 2: way I do. But I definitely you're extra nosy.
Speaker 4: And if you're working for any other big businesses. I
Speaker 4: don't mean to be rude here, but like, let's say
Speaker 4: your freelancer, let's say you're just Greci, right, you are Jessica,
Speaker 4: and you make content, beautiful content, and that for other brands,
Speaker 4: they see all of the influences in voices. So if
Speaker 4: one's coming through with GST and one's not coming through
Speaker 4: with GST, if you're new in PR, you might go, oh,
Speaker 4: we just.
Speaker 2: Got her invoice for jess she didn't charge GST. What's
Speaker 2: that mean.
Speaker 4: They're gonna ask, They're gonna know, everyone's going to know.
Speaker 4: And I'm not saying that that's shameful. No, Like it's
Speaker 4: not a bad thing at all, but you need to
Speaker 4: understand if that's something you want considered or not. And
Speaker 4: then three, it's done well ahead of time, so you
Speaker 4: don't actually have to worry about accidents are missing it,
Speaker 4: or are paying in arrears or you know, upsetting the
Speaker 4: tax office, which is my favorite thing not to do.
Speaker 2: Yeah, I hard agree from me there. I think set
Speaker 2: it up early. I think that's the premise of this
Speaker 2: whole episode. Really isn't it like, let's get your ducks
Speaker 2: in a row now so that nobody's having a meltdown. Exactly,
Speaker 2: we don't have meltdowns.
Speaker 4: And getting your ducks in a row is not just
Speaker 4: smart when it comes to I guess business and getting
Speaker 4: the structure right. It's also so essential from my perspective,
Speaker 4: because it means that you believe in your business. So
Speaker 4: if you're just like, oh no, just do it through
Speaker 4: my personal account, it's.
Speaker 2: Not worth it.
Speaker 4: It's not going to grow be like sorry, that's not
Speaker 4: the mentality that we have when we're starting our own
Speaker 4: small business. We don't need to take over the world
Speaker 4: with our small businesses. Like our small businesses could just
Speaker 4: be that extra ten k year so you get a
Speaker 4: bougie family holiday once a year, and like that's why
Speaker 4: we're doing it. But we are proud of that, we
Speaker 4: actually believe in that, and we you know, have conviction
Speaker 4: in that because ten ground this year might be twelve
Speaker 4: grand next year, and like things just creep up and
Speaker 4: that's great, But the structure is what's going to crucify
Speaker 4: you if you don't get it wrong, and that's where
Speaker 4: most people do go wrong.
Speaker 2: Yeah, for sure, all right, We've given you a lot
Speaker 2: to think about talking about GST and ABNS and all
Speaker 2: of those different options. So we know that marinate in
Speaker 2: your brain for a little marinates, marinate away, and then
Speaker 2: we're going to head to a quick break and when
Speaker 2: we come back, we're going to talk about claiming and
Speaker 2: tax in small business. I love these episodes so much.
Speaker 2: Don't go anywhere. Welcome back everybody. We've gone over how
Speaker 2: to set up your business, get it ready for tax time,
Speaker 2: and now I want to talk about what actually does
Speaker 2: happen at tax time because it seems like my birthday.
Speaker 2: That's very true, Gin thirty, good time to work in finance,
Speaker 2: h I know, it's amazing. Is tax onion a little
Speaker 2: bit different if you're registered as a sole trader versus
Speaker 2: as a company.
Speaker 4: Yeah, so it's a good question, and they are actually
Speaker 4: very different to one another, which might help you decide
Speaker 4: whether to register as a sole trader or as a business.
Speaker 2: So sit down, I've written a list. Are you ready.
Speaker 2: I'm ready.
Speaker 4: As a sole trader, your profits will be included on
Speaker 4: your individual tax return, so you will be paying tax
Speaker 4: at your personal marginal tax rate.
Speaker 2: Ye, which so we're talking about.
Speaker 4: Before yet so obviously that thirty two and a half
Speaker 4: percent is just standard, but it goes up much higher,
Speaker 4: and maybe you're in a situation where you're like, oh, well,
Speaker 4: actually another you know, ten grand actually pushes me over
Speaker 4: a threshold. We need to think about that. It's an
Speaker 4: extension of you and your personal financial affairs, and it
Speaker 4: actually makes tax time really easy. So like back on
Speaker 4: the flip side, me trying to do a jump scare.
Speaker 4: Most like, it's really easy to do your tax when
Speaker 4: it comes to being a sole trader. If you're registered
Speaker 4: as a business, you will have to do the tax
Speaker 4: for your business and your own finances because they're not
Speaker 4: bundled together like a sole trader, and that is not
Speaker 4: only more complex, but can be a little bit more costly.
Speaker 4: So you might be paying I don't know, Jess, what
Speaker 4: do you pay for your tax return eachy maybe like
Speaker 4: two hundred and fifty bucks nowadays around that is pretty standard.
Speaker 4: You'll be paying maybe four or five hundred dollars for
Speaker 4: a tax return done for your business in addition to
Speaker 4: your individual tax return. So just keep that in mind. Yep,
Speaker 4: big businesses pay thirty percent tax rate on profits. Jess, Oh,
Speaker 4: just flat, just flat. There you go, very very sexy.
Speaker 4: Profit means the money you've made after pay deductions, et cetera,
Speaker 4: not just the gross income that you look at that
Speaker 4: you go, well, that's gross, I could have made that,
Speaker 4: So it's not you know, if you had ten thousand
Speaker 4: dollars coming in the door as a business, they don't
Speaker 4: go all right, well you are thirty percent of that.
Speaker 4: And this is why tax time can be a little
Speaker 4: bit complicated because you go through that and go, okay,
Speaker 4: well I paid, Jessica, I also, you know, paid rent
Speaker 4: for my facility. I also had these printing costs for
Speaker 4: my business.
Speaker 2: And you have all these costs the deduction that are deductions,
Speaker 2: and then at the end of that is your profit
Speaker 2: and that's what you pay tax on. Okay, that's pretty good.
Speaker 4: So look it's pretty good. But as we said, big
Speaker 4: business pays thirty percent. You go, that's pretty sexy, Jess
Speaker 4: because obviously the average marginal tax rate is thirty two
Speaker 4: and a half cents.
Speaker 2: It's two and a half percent better off. It's pretty
Speaker 2: good to make.
Speaker 4: Just doing some basic maths, not advice again, small business
Speaker 4: tax jess reduced twenty five percent.
Speaker 2: Okay, so we're getting closer to that mistage you made.
Speaker 2: It's much closer. That's pretty good, much more palatable throughout
Speaker 2: the year.
Speaker 4: You're obviously, as I said at the first half of
Speaker 4: this episode, you're going to be required to complete what's
Speaker 4: called a business activity statement or a MASS as you
Speaker 4: call it in the industry, which is quarterly. And I've
Speaker 4: written down it can help it tax time, it doesn't.
Speaker 4: It definitely does help it tax time, not can it does?
Speaker 4: It makes me feel so on top of it. I
Speaker 4: don't like having to talk about tax quarterly, but I
Speaker 4: promise everything is easier when it's.
Speaker 2: Broken down into smaller chunks.
Speaker 4: Yeah, So it kind of becomes a little bit sexier
Speaker 4: when you start talking about the cash rate, right, Jessica,
Speaker 4: because you know small business is taxed at a reduced
Speaker 4: rate of twenty five percent. You go, hold on, so
Speaker 4: twenty five percent. What if I was, you know, earning
Speaker 4: this seventy thousand dollars in addition to my normal income,
Speaker 4: and I've had a really good tax here that it
Speaker 4: would actually push you as an individual, like if you're
Speaker 4: working as a sole trader, it is included on your
Speaker 4: individual tax return, which might push you to the highest
Speaker 4: marginal tax rate in Australia is forty five percent tax. Yes,
Speaker 4: and that means you would earn over one hundred and
Speaker 4: eighty thousand dollars, which if you are an individual who
Speaker 4: has a PAYG job and a side hustle, it's not
Speaker 4: that hard to get to that number.
Speaker 2: Yeah, totally plausible. Totally plausible.
Speaker 4: Like we're not talking about pipe dreams, and oh my gosh,
Speaker 4: I wonder like one hundred and eighty thousand dollars for
Speaker 4: a PAYG job. You go, wow, that's a lot of money. Yeah,
Speaker 4: but if you're doing two jobs at one time, you
Speaker 4: kind of go, all right, well, I might earn you
Speaker 4: one hundred and ten hundred and twenty in my normal job,
Speaker 4: and then I might, you know, earn another seventy.
Speaker 2: Well, now you're at the highest marginal tax rate forty
Speaker 2: five thousand we need, Yeah, forty five percent.
Speaker 4: You're not on tax, you're on practical advice. I'll be
Speaker 4: on the math side of things like this, So to
Speaker 4: keep it that way, but I think it's really important
Speaker 4: to I guess look at that because twenty five five
Speaker 4: percent bit sexier than forty five percent.
Speaker 2: Yeah. There's also obviously going to be things about distributing
Speaker 2: that income. So we'll talk about that later. But they
Speaker 2: are very different. Okay, before the break, I gave the
Speaker 2: example of someone who's looking at the sole trader model,
Speaker 2: but they could maybe decide to go the other way
Speaker 2: and go for a business instead. Are there any advantages
Speaker 2: around tax time to eat the model that may help
Speaker 2: people decide which category would be the best option for them.
Speaker 2: So the answer is yes.
Speaker 4: First thing first, As a sole trader, tax is just
Speaker 4: easier and faster to do. It's the same way you've
Speaker 4: been doing tax always. It's just another line item, pop
Speaker 4: it in and it.
Speaker 2: Spits it out. It's very straightforward.
Speaker 4: The ATO now has their E tax system super super easy.
Speaker 4: Especially as a business owner, I feel like once you
Speaker 4: start running a business, you get like a little bit overwhelmed.
Speaker 4: You're like, oh my gosh, what's tax time going to be.
Speaker 4: It's going to be crazy. If you've got all your receipts,
Speaker 4: if you've been keeping track of your income, it's a cinch,
Speaker 4: I promise. However, if you register as a business, you're
Speaker 4: taxed on the profit, meaning that before tax time you
Speaker 4: could actually look at business claims to help you reduce
Speaker 4: your profit and pay less tax, and you can even
Speaker 4: pay yourself out of that. So for example, you might
Speaker 4: have made like sixty grand for the year and then
Speaker 4: you bought a two thousand dollar laptop and decided to
Speaker 4: pay yourself fifty thousand dollars. That's actually fifty two thousand
Speaker 4: dollars in expenses, So you're really only claiming an eight
Speaker 4: thousand dollars profit, jess, and you'll be taxed from that
Speaker 4: instead of the full sixty thousand dollars, which I think
Speaker 4: a lot of people assume. Yeah, okay, right, So with
Speaker 4: that said, if you are a service based business, it
Speaker 4: might actually also be advantageous to be a sole trader. However,
Speaker 4: if you need to buy products or materials to make
Speaker 4: your business run, like, you probably have a heap of
Speaker 4: outgoing costs, Whereas at tax time it would be better
Speaker 4: to just have registered as a business because like you're
Speaker 4: claiming them in arrears, if that makes sense. Yeah, so
Speaker 4: it's just a little bit more complex.
Speaker 2: Yeah, that's interesting thinking about claiming something back under tax
Speaker 2: because I feel like, even if you're not a business owner,
Speaker 2: at tax time, everyone's always saying what can I claim, Like,
Speaker 2: how can I maximize the money that I've earned because
Speaker 2: no one likes paying cap.
Speaker 4: No one likes paying tax. But I also this is
Speaker 4: such a spicy opinion. I'm always like, why are we
Speaker 4: here justifying purchases for things that your business might not need,
Speaker 4: just so you can kind of get a discount on them. Like, yes,
Speaker 4: you're getting a tax benefit, but it doesn't make the
Speaker 4: item free. You don't need a new car or a
Speaker 4: new laptop just because tax time is coming. And yeah,
Speaker 4: like if you genuinely need your new laptop, jests.
Speaker 2: Good time to do It's good time to do it.
Speaker 2: Do you know what?
Speaker 4: There's usually sales on Like office works is always like, oh,
Speaker 4: look at our laptops coming up to the end of
Speaker 4: financial year. Sexy, very nice if you already need one,
Speaker 4: because the claiming process happens really quickly. So right, like
Speaker 4: let's say you're like.
Speaker 2: Oh, actually do need a laptop. It's June.
Speaker 4: You buy it on the fifteenth of June. You can
Speaker 4: claim that ye at the thirty June tax time. But
Speaker 4: like if you bought it in December last year, still claimable,
Speaker 4: jests Yeah, I'm just trying to like stuff it in
Speaker 4: that year. And I just go, this is so silly.
Speaker 4: You are making purchases that you didn't need to make.
Speaker 2: So what can we claim then, is my question?
Speaker 4: Oh my gosh, there are so many things that you
Speaker 4: could claim, and I could go on and on and
Speaker 4: on about it because it totally depends on what industry
Speaker 4: you're in. You in the adult industry, Jess, you could
Speaker 4: climb loop there go. Are you in gardening and farming?
Speaker 2: Great?
Speaker 4: Do you know you can claim your dog and garden notmees?
Speaker 4: Oh like wild? So let's give you some more practical
Speaker 4: advice because I don't think either of those things really
Speaker 4: help you.
Speaker 2: No, but please don't guess what you can claim.
Speaker 4: Don't just go, oh, I assume I'd be able to
Speaker 4: claim that, because you don't want to do this incorrectly,
Speaker 4: because if the taxman audits you and it's incorrect, not
Speaker 4: only are they going to ask you for the money, Jess,
Speaker 4: they're gone find you.
Speaker 2: That's not good as someone who's been audited as well,
Speaker 2: Like they dot their eyes and they cross their t's.
Speaker 4: Yeah, and it's kind of like not innocent until proven guilty.
Speaker 4: With the ATO, they're like, you're guilty until you prove
Speaker 4: that you're innocent.
Speaker 2: And with you when you.
Speaker 4: Got ordered to have your receipts, you would have had
Speaker 4: your receipts nextfully, but like in that if you were me, yeah, stressful.
Speaker 4: Thankfully I have Jess now, so we're okay. But historically
Speaker 4: I'm like, I don't have that receipt But I would
Speaker 4: advise getting an accountant who specializes in the field that
Speaker 4: your business is in, who's actually going to know what
Speaker 4: you can and can't claim. Now, Jess used to do
Speaker 4: your tax yourself, and I bullied you because I am
Speaker 4: the world's biggest bully, and I.
Speaker 2: Said, you have to go to an accountant. Yes, was
Speaker 2: that a good decision? Life changing decision? Why? I think
Speaker 2: at first I was always like, oh, I can do
Speaker 2: my own tax myself. Why would I pace when I
Speaker 2: was do it, like you said, two d fifty bucks,
Speaker 2: you know, a decent amount of money, Like, if I can,
Speaker 2: it's a matter of money, Yeah, why do it? But
Speaker 2: for me, the amount of things that I just didn't
Speaker 2: know that I could claim you as a sole trader, and.
Speaker 4: I obviously sent you to someone who knew what they
Speaker 4: were doing in your space. And remember you walking away
Speaker 4: being like, oh, she said I could claim this, And
Speaker 4: I was like, well, yeah, of course you can, because
Speaker 4: you aren't the tax person. And like, I'm a money person,
Speaker 4: so I kind of knew some of those things. Yeah,
Speaker 4: like invest the money one year and you know, if
Speaker 4: it doesn't work out, you get to claim it or
Speaker 4: next year's tax. It's a win and then you don't
Speaker 4: have to do it again. But nine times out of ten,
Speaker 4: i'd say an accountant puts you in a way better
Speaker 4: position than you could yourself.
Speaker 2: Yeah, and if you need a recommendation, we're happy to
Speaker 2: pass you along to someone. So oh yeah at your website. Well, yeah,
Speaker 2: there's a page on our website. Hit up that and
Speaker 2: we can match you up with somebody.
Speaker 4: I mean, we'll match you up with someone real good.
Speaker 4: But I hate to tell you this justs accountants not
Speaker 4: taking on new clients.
Speaker 2: Un lucky. Sorry.
Speaker 4: Also another hot tip, Jess is have a look on
Speaker 4: the ATIO website. I know you probably don't frequent it.
Speaker 4: You're probably not like waking up.
Speaker 2: In the morning meal. I'm just gonna have a little
Speaker 2: cover of Joe and I'm gonna sit down on my
Speaker 2: laptop and look at the ADO website.
Speaker 4: That's what I do, though, be more like VD I
Speaker 4: like it, But look at the Atio website because they
Speaker 4: have a whole section around what you can claim and
Speaker 4: what you can't claim, and it changes depending on the
Speaker 4: business that you run. And they also post lots of
Speaker 4: articles of like, I mean, they don't market it this way.
Speaker 4: I'm just trying to be sexy marketing for the ATO,
Speaker 4: but like they have some horror stories on there too,
Speaker 4: of like this person tried to claim this and they
Speaker 4: got in trouble in this way.
Speaker 2: Yeah, I just love a pervy story me too, so
Speaker 2: kind of helpful. They have a really great forum too,
Speaker 2: where it's manned by a tier stuff and you can
Speaker 2: actually head in there and post your question or be like, oh,
Speaker 2: theoretically if I did this and did that hypothetically, yeah,
Speaker 2: like they can't provide you personal advice, but you can
Speaker 2: kind of ask generalized questions and it's coming straight from
Speaker 2: the source. You know that it's correct, because sometimes those
Speaker 2: clickbaity articles that you see floating around at tax time, yeah,
Speaker 2: like oh my gosh, did you know you can claim
Speaker 2: your pridor handbag? I wouldn't get those to take those legitimately.
Speaker 4: I also think it's really important to check the Atier
Speaker 4: website because each year in the lead up to tax time,
Speaker 4: the ATO put out like a big statement, and the
Speaker 4: statement usually explains what they're targeting this year. Yeah, let's
Speaker 4: use a recent example, So I think it was this
Speaker 4: year they came out and said, all right, we're changing
Speaker 4: the work from home claiming rules because during COVID we
Speaker 4: gave you guys a whole heap of care sessions on
Speaker 4: what you could and couldn't claim from home, and obviously
Speaker 4: we're a little bit more lenient with that because lots
Speaker 4: of people were working from home. Now we're cracking down
Speaker 4: on that. If you're claiming work from home, you're going
Speaker 4: to need to back it up because we're probably going
Speaker 4: to audit a heap of people in this situation. So
Speaker 4: it's nice to just know where they're tightening up. Not
Speaker 4: so that you can protect yourself even more, because you
Speaker 4: should be doing the right thing in the first place,
Speaker 4: but it's just pervy. It's good to keep her finger
Speaker 4: on the pulse and stand good reminder. And also things
Speaker 4: that you could claim last year might not be claimable
Speaker 4: this year, so there might have been certain concessions or
Speaker 4: certain leniencies that they're like, oh, well, Jess, we're going
Speaker 4: through COVID so you can claim this this year and
Speaker 4: then they can't next year. So, for example, there's an
Speaker 4: uproar in the She's on the Money community this year
Speaker 4: because the instant asset right off amount is actually decreasing
Speaker 4: next financial year, or it has now decreased this year,
Speaker 4: whereas historically you could claim a lot more on that.
Speaker 4: So you just want to have your finger on the pulse,
Speaker 4: because if you're going to make decisions financially, let's make
Speaker 4: sure that you're not making them based on rules that
Speaker 4: don't apply to you anymore.
Speaker 2: Yeah, so don't guess tax claims. We don't want to
Speaker 2: be dancing with the devil or in this case, the
Speaker 2: tax man. Excellent advice.
Speaker 4: Oh hold on one more thing. Obviously I was saying
Speaker 4: to you earlier, like, oh, yeah, I registered for GST earlier.
Speaker 4: One of the additional benefits of registering for GST is
Speaker 4: that you're able to claim it back. So if you're
Speaker 4: not registered for GST JS, you're not able to claim
Speaker 4: back the GST on any of your expenses or materials
Speaker 4: that you purchased to sell. Okay, interesting, just good to
Speaker 4: know because you might go, oh, I claim that back
Speaker 4: at tax time because you've heard that gest is claimable.
Speaker 4: It's claimable if you're paying it. Yeah, so it's like
Speaker 4: a two way street. If you're not on the two
Speaker 4: way street, you don't just get to claim it when
Speaker 4: you're not paying it.
Speaker 2: That makes total sense. Is there anything you want to
Speaker 2: leave us with about bank accounts? Are you going to
Speaker 2: let me talk about bank accounts in this episode too?
Speaker 2: Your favorite topic? Oh, this is my favorite episode.
Speaker 4: We don't even need the Sheese on the Money Podcast
Speaker 4: as a whole anymore. We just need Victoria talking about
Speaker 4: banking systems. So yes, obviously, always open a new bank
Speaker 4: account for your business, whether it is big or whether
Speaker 4: it is small, because it's going to help you keep
Speaker 4: track of all of that money that is coming in
Speaker 4: and going out. And I promise you are going to
Speaker 4: want to keep track of that. If you're a registered
Speaker 4: for JSD, because obviously can't give personal advice, you could
Speaker 4: potentially think about opening a separate bank account for that
Speaker 4: money to go into it. I do that personally where
Speaker 4: you're not going to spend it. I do the same
Speaker 4: for tax. So while we said earlier we withhold thirty
Speaker 4: percent tax, so like my business pays thirty percent tax,
Speaker 4: say ten thousand dollars payment comes in, I automatically put
Speaker 4: three thousand dollars into my tax account. And I do
Speaker 4: that because it makes me feel so comfortable. I go immediately,
Speaker 4: if we pretend this was profit, I'm going to be
Speaker 4: paying three grand tax on this at a minimum. And
Speaker 4: then I take my JSD and pop that in a
Speaker 4: separate account, and I know that I'm clean. I then
Speaker 4: use the money that is left over, So the seven
Speaker 4: thousand dollars left over, I leave that in my business account,
Speaker 4: and that's what pays my bills. That's what keeps the
Speaker 4: light on. Coming to tax time, I know that I
Speaker 4: have the money set aside to pay tax.
Speaker 2: I pay tax from that.
Speaker 4: My business accountant goes through everything at tax time and
Speaker 4: then lets me know at the end of the financial
Speaker 4: year what my true profit is. And I like it
Speaker 4: that way, and it's honestly, I would say a privilege
Speaker 4: to act that way, because I'm technically putting aside a
Speaker 4: full thirty percent irrespective of what my costs are, because,
Speaker 4: as you guys know, I have staff to pay, I
Speaker 4: have rent to pay, I have overheads, like do you
Speaker 4: know how many subscriptions I pay for?
Speaker 2: Like photoshop, and like podcasting.
Speaker 4: Apps, I cannot it's expensive, website management fees.
Speaker 2: Like we'll go through.
Speaker 4: All of these hidden costs of business at some point,
Speaker 4: but like, I do not realize how expensive it is.
Speaker 4: Side note Jessica, to have an edm ah, so to
Speaker 4: have an email marketing platform, you go, oh, just sign
Speaker 4: up for Mailchimp. And that's what I did when I
Speaker 4: started cheese on the money, just went straight to mail Chimp.
Speaker 4: I was like, Slate, it's free, do we love that?
Speaker 4: And you get to a certain amount of subscribers and
Speaker 4: they're like, hah, it's paid to play, and you're like, oh, okay, no,
Speaker 4: that's fine. I've got some subscribers, I'll pay and then
Speaker 4: you get more subscribers.
Speaker 2: Anyway, back to.
Speaker 4: The point separate accounts because one, I like clarity, but two,
Speaker 4: putting aside that money means that I sleep really well
Speaker 4: at night. Yeah, knowing that there's money in an account
Speaker 4: to pay tax, there's money in my other account to
Speaker 4: pay for my staff and my team, and then at
Speaker 4: the end of the day, we get to talk about
Speaker 4: profit once tax time comes and goes.
Speaker 2: Yeah.
Speaker 4: So I think it's really important to be structured properly,
Speaker 4: and it might seem like a lot for now because
Speaker 4: you're like the I have literally just started my business.
Speaker 4: I earn like four dollars. You've got rocks in your head, like,
Speaker 4: I cannot believe it. I just went to sign up
Speaker 4: for this new business banking account. It's going to cost
Speaker 4: me ten bucks, Like are you joking? Ten bucks? And
Speaker 4: I haven't even made a profit yet. Yeah, a promise
Speaker 4: that investment is worth it and getting it right at
Speaker 4: the start is going to save you so many headaches
Speaker 4: and also any questions from the tax man later.
Speaker 2: Yeah, and on a smaller scale, having that separate account,
Speaker 2: if you're doing all of your spending from that account
Speaker 2: as well, it makes me really handy at tax time
Speaker 2: if you're someone who maybe does lose their receipts or
Speaker 2: forgets what they have and what they could claim. It's
Speaker 2: almost like an itemized list of everything that you purchase.
Speaker 2: So it's super duper handy, so easy.
Speaker 4: Your accountant and your bookkeeper at some point when you
Speaker 4: have both of those are going to love that. You're
Speaker 4: going to love that more because you're not filtering through
Speaker 4: Oh no, that was zoobreets.
Speaker 2: Oh that was me.
Speaker 4: Oh that was you know me and sports girl. Oh,
Speaker 4: actually that's a business expense. Start that one. Yeah, Like
Speaker 4: that's not helpful. That is not an effective use of
Speaker 4: your time. And as a small business owner, you only
Speaker 4: have so much time. We need to make the most
Speaker 4: of it. And having a clean banking system is going
Speaker 4: to make it easier. And just on to that point
Speaker 4: of like, if you're someone who loses your receipts, like
Speaker 4: Victoria Divine Years, you're going to start an album on
Speaker 4: your phone and take a photo of every receipt that
Speaker 4: comes in so that you.
Speaker 2: Know that it's stored somewhere. That helps me a lot.
Speaker 4: I mean the ATO app actually enables you to upload
Speaker 4: it directly, but like I don't know if I want
Speaker 4: to upload it right now, Like my accountant might go,
Speaker 4: oh vi that you know, work lunch only some of
Speaker 4: it's claim. I just I like having it separately so
Speaker 4: I can provide it all to my accountant.
Speaker 2: Yeah, separate.
Speaker 4: But then also you can actually upload your receipts directly
Speaker 4: to the ATO portal throughout the year to keep track
Speaker 4: of them here. That's also free.
Speaker 2: There you go. I feel like we've covered a lot too.
Speaker 2: I feel like we've covered too much. It was a
Speaker 2: big episode.
Speaker 4: I am really sorry to all of the people at
Speaker 4: the start of this episode that I might have got
Speaker 4: hyped up when I said this is a really sexy topic,
Speaker 4: because it wasn't aware like. But I also think being
Speaker 4: empowered in business, being on top of your numbers, that
Speaker 4: is arguably very sexy.
Speaker 2: I completely agree. And now you know how to set
Speaker 2: yourselves up for tax time without getting fined, without getting
Speaker 2: in legal trouble, and hopefully without getting a headache, and
Speaker 2: so your business goes exactly right.
Speaker 4: We love that, all right, Well, have a really good week, guys.
Speaker 4: We'll see you next month for a business Bible episode.
Speaker 4: But as always, the conversation is going to continue over
Speaker 4: on our Facebook group business Buiable, not She's on the Money.
Speaker 4: We're going to keep that one separate because.
Speaker 2: Not everyone cares about business. That's okay, and that's all right.
Speaker 2: But we've found our niche and we love them hard. Yes,
Speaker 2: we do your our people. See you next time, guys.
Speaker 1: Hi.
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Speaker 3: in nature and does not consider your individual circumstances. She's
Speaker 3: on the Money exists purely for educational purposes and should
Speaker 3: not be relied upon to make an investment or financial decision.
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