Switching from being an employee to an independent contractor or a freelancer can be daunting, you need to start your own business, there are tax obligations, record keeping, insurances... it all seems too complicated.
Take it easy, it is not that hard. Starting you own contracting business is actually quite simple once you know the drill.
Nominal Accounting is here to help you with your record keeping, time billing, invoicing, payroll and payslips, GST record, BAS submission and a lot more of the things you will need to run a successfull contracting business.
There are few things you need to keep in mind:
- Tax File Number (TFN)
A TFN is a unique number issued by the Tax Office to individuals and organisations that is used to administer tax. If you are operating as a sole trader you must use your individual TFN. If you are part of a partnership or a registered company you will need to apply for a separate TFN.
- Australian Business Number (ABN)
An ABN is a unique number that independent contractors use when dealing with other businesses. Obtaining an ABN is advisable before undertaking work as an independent contractor, otherwise businesses may legally withhold 46.5% of payments from you.
- Goods and Services Tax (GST)
GST is a consumption tax charged at the rate of 10% on the value of the taxable supply of most goods, services and other items sold or consumed in Australia. As an independent contractor you may need to register for GST.
- Pay As You Go (PAYG)
If you make payments from which withholding is required - for example, wages to employees or payments to businesses that do not quote an Australian business number (ABN) - you must register with the Tax Office before you first withhold.