Self-employed? Here are three things you should do before end of financial year

hand holding bag of moneyIf you’re self-employed, here are three ways to make tax time easier — and maybe save money too.

If you’re one of the two million or so self-employed Australians out there1, you’ll know how time-consuming the end of the financial year (EOFY) can be. So the earlier you get organised, the easier it will be when tax time comes around.

1. Understand what you can claim

As a self-employed person, you can claim expenses that many employees can’t. However, they must be bona fide business expenses — and you’ll need the receipts and paper-work to prove it. For example, you can claim:

· Petrol — but only for work-related travel, and you’ll need to keep a logbook.

· Travel expenses — but you’ll need receipts, and the trip needs to be genuinely for business (and for more than one day).

2. Top up your super

According to the Australian Super Funds Association (AFSA), in 2012 nearly 25% of self-employed Australians had no super whatsoever2. This could lead many to suffer financial hardship in retirement.

So make sure you make contributions yourself. You can contribute up to $30,000 (or $35,000 if you were aged 49 or older from June 30, 2014)3. Remember, if you’re self-employed, you may be able to claim all your super contributions at tax-time — but do it before the end of the financial year.

3. Protect your income (it’s tax effective)

If you work for yourself, you’re not entitled to Workers Compensation. So it’s worth taking out income protection insurance to protect your income from the risk that illness or injury may put you out of action for a while.

Generally, the premiums are tax-deductible, making them more affordable. You may also be able to buy income protection insurance (and life insurance) through your super fund.

Advice can help

Running your own business, while rewarding, can be time-consuming and complex — so it makes good business sense to get advice.

1 Independent Contractors, Independent Contractors: How Many? (Australia), November 2013 and Australian Bureau of Statistics 6359.0 – Forms of Employment, Australia, November 2013
2 ASIC, Smart Money, Self Employed People, January 2015
3 ATO, Concessional contributions cap, December 2014
Source: MLC

Any tax estimates provided in this publication are intended as a guide only and are based on our general understanding of taxation laws. They are not intended to be a substitute for specialised taxation advice or a complete assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent. This information is based on our interpretation of relevant superannuation, social security and taxation laws as at 20 March 2015.

Article prepared by Infocus Securities

Tags: , , , , ,