Trying to get your freelance career off the ground can be a daunting task. Most of the time you feel like Mr Magoo, a naïve nuisance, blindly walking along girders as they fly through the air and driving your car off various cliffs. And then once you’ve put the grind in, won the client, done the job and been paid, there’s tax to sort out and you realise the work has only just begun.
There’s not a lot of clear information out there about the practical application of tax law for a freelancer, so it’s no wonder than when Amanda Newton, Negotiis tax whiz and Framework local, arrived she was bombarded by a rabble of confused Frameworkers with questions like: “Babies don’t pay tax so if I wear a baby’s bonnet every day, do I have to pay tax?” and “Can I deduct the cost of this cheese and ham croissant from my taxable income because I’m hungry?”. The answer to both questions, of course, is a resounding no (everyone knows babies actually pay the most tax of any age bracket and rightly so!).
In between answering these questions and more, Amanda gifted us with a comprehensive presentation on all things tax.
June is a great time of year to get your finances in line and invest in your business because you’ll reap it all back in tax season, just a few months down the track. Deductions such as the cost of your tax accountant, laptop insurance, income protection insurance, superannuation payments, office equipment and stationary can all help push your taxable income under the line come tax time (so splurge on that fancy ergonomic office chair, you’re worth it).
When it comes time to book your tax appointment, bear in mind some of the chicanery (as reported by Framework’s own Jo Stewart) that goes on in some accountancy firms and book with someone you can trust (*cough* Amanda Newton *cough*).
But in the end, Amanda says that a life free from tax-stress comes down to two habits: keeping good records and getting the right advice. So basically, leave the biggest paper trail you can and invest in some good advice from a tax accountant you trust rather than applying generic advice from the internet to your situation. Tax is a complicated beast and while you really wouldn’t want to break the law because of ignorance you also don’t want to miss out on tax deductions and incentives you’re entitled to as a freelancer or small business.
Written by Imogen Baker, video by Nick Parker and Eli Dance Ali