Paying Sole Trader Tax Melbourne
If you’re a sole trader (meaning you run your own business), you pay taxes slightly different from everyone else.
That being said there are many benefits to being a sole trader and filing your taxes is probably more straightforward than you think.
As you’re starting out, registering as a sole trader is a great idea and is a relatively cheap and simple option for small businesses.
However, as your business grows it may be worth registering as a company and you’ll need to approach tax differently.
What is the difference between a Sole Trader and a company?
The main differences between the two are the tax-free threshold and the tax rates.
Sole traders benefit from a tax-free threshold of up to $18,200 while companies are taxed from their entire profit.
Sole traders will also need to file an individual return, while companies will need to do a Company Tax Return as well as their personal tax returns
What are Sole Trader tax rates?
After deducting business expenses, sole traders apply the same rates as personal taxes to their income.
Deductions can include rent (for operating expenses), accounting fees, travel costs and working-from-home expenses (if relevant).
Tax rates can differ annually, and may not include the Medicare levy which also needs to be factored in.
How do you pay tax as a Sole Trader?
Through the PAYG instalments system, sole traders pay their tax quarterly which can be paid directly from the myGov website.
Pre-paid setups are also available, so you don’t have to worry about missing a payment.
If you’re looking for assistance setting up your new business, talk to our tax consultants today.
With their extensive experience, they’ll be able to help make your new business venture stress-free!
Contact Mobile Tax & Accounting Solution’s offices to get help with your tax lodgement this season.
