Running a part-time business in Australia

[Springbok]

Hi everyone

I need some advice from an Australian perspective please:

What is the deal from a tax point of view when you run a part time business from your home/apartment? Can you deduct business expenses from your rent / mortgage payments for tax purposes?

What format should the business have, if 2 or more people are involved? A CC or a partnership? What are the advantages/disadvantages of each and how are they different from each other?

Any other information will be appreciated!

Thanks!

[ottg]

Hi

Everything you need to know regarding running small businesses & homebased businesses

http://www.ato.gov.au/businesses/pathway.a...01/003&mnu=3366

Everything you need to know regarding tax implications

http://www.business.gov.au/Business+Entry+...ed+business.htm

If you want to join a homebased network then:

http://www.homebasedbusiness.sbdc.com.au/

I don't want to repeat the above info but basically:

a. you can register as a sole proprietor.

b. People can work for you as contractors.

c. If you want to employ people then rather ensure you are protected and register a company for limited liability. This will influence any applications for a bank loan

d. Register business name on-line (BN number)

e. Register business (ABN number)

e. You need a home occupation permit/approval not employing more than 2 people from your local council

f. If you want to erect a sign you also need approval from your local council

g. If you deliver a service get Liability insurance and Professional Indemnity Insurance. The underwriters are all competitive but for me CGU seems better, based on many factors.

h. Get insurance to protect your office equipment seperately from content of house. Your local bank can help here. Yes, g and h uses different brokers

i. Generally all expenses accrude to generate an income are tax deductable. Water, gas, electricity and rent is % proportion deductable. I am unsure about a Bond because that is an income for the bondholder/owner. However, the links above will have the relevant info!

Hope it helps!!

[Go RSA]

Can you deduct business expenses from your rent / mortgage payments for tax purposes?

Look into capital gains tax.

If I understand the rules correctly, if you claim a portion of the mortgage payments for tax purposes - say 10% based on business area, then when you sell your house, 10% of the capital gain should not be regarded as capital appreciation on your principal abode, but is a capital gain on which you pay capital gains tax. Don't let this put you off, as often it is still worth doing as it helps the cash flow.

If you pay rent instead, it would be a business expense, but you would have to declare the rent received from your business as personal income.

Disclaimer: I am not an accountant, so treat my comments with due care.