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Tax returns: necessary evil or imaginative fiction, with Lauren Thiel

by Melanie Dankel 

On 19 May, Editors SA hosted a Zoom meeting with accountant Lauren Thiel from The Real Thiel. Lauren covered five key areas for freelancers, sole business traders and creatives.

1.    Bookkeeping: As uncreative as it sounds, Lauren advises everyone to have something – a shoe-box, an Excel sheet, accounting software – to track what comes in and out. She also suggests you put aside half an hour each month to sort through that month’s incoming and outgoings so it does not completely overwhelm you at tax time.

2.    Home office expenses: If you are working from home (and who is not at the moment?), it pays to know what you can deduct on your office expenses. Forget deducting one hundred per cent of your mobile downloads or a lavish lunch out, but a percentage of your electricity, phone and internet might be deductible. 

3.    Deductions: Lauren says most people feel as though they are missing out on secret deductions, but they are probably not. She suggests having a separate bank account for everything related to your business. If you did not spend it, you probably cannot deduct it.

4.    Assets: If you need to buy an extra computer monitor, work chair or the like, these purchases could be one hundred per cent deductible at tax time. Small businesses can usually make some decent deductions under the small business asset write-off laws. But not everything is covered, so it pays to get some advice before putting a down payment on that Audi.

5.    Cash flow management: If you are making a profit, you need to plan for tax. This is where having a separate bank account comes in handy. At the moment, because of COVID-19, you can choose to adjust your quarterly PAYG statements down, but be aware that your tax bill does not go away. Consider whether you’re better off just paying the instalments and dealing with the adjustment or (even better) a refund after June 30.

 

A note on lumpy cash flow


If you are a sole trader this is something you need to deal with. There is no perfect way to even this out. Lauren suggests that sole traders need as much as three to six months’ worth of savings to create a buffer. This might seem like a lot and it might take a while to save this, but whenever you hit a rough patch and you need to draw on those savings, you at least will not hit rock bottom. And now, while we are not going out or spending money on our usual social activities, is the perfect time to start socking it away for a rainy day. 

If you would be interested in attending a follow-up event in June focused solely on tax returns for sole traders and creatives, email us at edsa.events@iped-editors.org.   

Find more easy-to-understand advice from Lauren Thiel at therealthiel.com.


Melanie Dankel is a EdSA committee member and professional development officer and can be contacted at edsa.events@iped-editors.org

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