Nobody teaches you how to be self-employed. It's a path that many of us embark upon, driven by passion, creativity, and the desire for independence.
Yet, being self-employed can present numerous challenges.
In this blog, we'll explore the realities of self-employment and uncover the keys to finding success in business.
Be mindful of your finances
Managing your cash flow is crucial - though your overall annual income may be strong, remember that the flow of money can be irregular. During those weeks or months between paychecks, it's essential to plan ahead. Save some money for unexpected situations, and make larger purchases only after you've paid yourself and covered regular bills. Also, consider setting aside a little extra for quieter periods and to treat yourself to a well-deserved break.
Keep your personal and business finances separate – this will bring peace of mind. Designate specific bank accounts for your business transactions, so you can easily track earnings and expenses. This way, you'll always know the financial state of your business.
Thinking about taxes throughout the year – this can prevent last-minute stress. Seek advice from an accountant to plan for upcoming tax obligations. As you earn, set aside a portion for income tax payments. Having a dedicated savings account just for taxes will help you stay organized and avoid any surprises. Remember, as your business grows, you might need to pay income tax in quarterly instalments.
If your business earns over $75,000 per year, register for GST - and lodge regular Business Activity Statements (BAS). To ensure you're managing GST correctly, you can use our helpful GST calculator.
Tax deductions can lighten your tax burden - consult with your accountant to identify which business expenses are eligible for deductions, and keep all your receipts as evidence.
Considering your superannuation early on is a wise move - even though it may not be a top priority initially, saving for your retirement is essential. Since you won't receive regular super contributions from an employer, make sure to contribute to your super yourself. It's a tax-efficient way to secure your future, and you might even be eligible for government co-contributions.
Protecting your income and your business is crucial, especially without sick leave – therefore income protection insurance can be a valuable safety net, and you can check if your super fund offers this coverage. Additionally, explore other insurance options like public liability and workers' compensation insurance to safeguard your business.
Educate yourself on legalities
Understanding your legal requirements is vital for setting up your business properly - the guide to starting a small business from business.gov.au is an excellent resource to help you navigate this process.
Remember, if you own and run your business as a director under a company structure, you'll need to apply for a director ID - the fastest way to get a director ID is to apply online. It's free and you only need to apply once.
Protect your personal health
If you work from home, treat your work-at-home days just like you would in a traditional office setting – it might be tempting to stay in your cozy PJs, but dressing the part can boost productivity and make you feel more professional. Keep that workspace tidy and separate from your living space for a clear boundary between work and personal life.
Be your own supportive boss - it's easy to forget to take care of ourselves when we're busy running the show. Remember, you deserve to invest in tools and resources for your business to thrive.
And hey, don't forget to take breaks - running a business can be intense, and we all need some time to recharge. Consider taking a holiday or allowing yourself some sick leave when needed. We don't want that "millstone around your neck" feeling – it's not good for your health or your business. So, take care of yourself and enjoy at least one day off per week, even if it can't be on the weekend.
We help with business planning and accounting
With the right financing in place, you can fuel your business's growth and pave the way for success.
Call our friendly and knowledgeable team on +61 8 9300 9665