ASK US WEDNESDAY: “Your top tax tips for freelancers?”

by Leo Wiles
25 July 2019

I’ve just started freelancing and realising things are very different in regards to having to manage my money a lot more. What are your tax tips for freelancers who want to start as they mean to go on? Abigail  

Glad you asked, Abigail. It can be a bit of a learning curve for freelancers switching from being an in-house employee and having their tax / super etc taken care of, to freelancing – where you are expected to do all of the above. It’s about having good systems in place and being vigilant with putting money away – for savings, tax and super especially. So here are my tax tips for freelancers (new or veterans!).

  1. Put 30 percent of your earnings in a separate account. When tax time rolls around (or you get your quarterly BAS), you’ll then have the money to pay for it. This ATO calculator may also come in handy.
  2. Make regular contributions to super. It’s scary to think that freelancers aren’t covered by the super guarantee (the 9.5 percent employers are bound by law to pay for salaried employees). We’re also not legally required to contribute to super – so it’s probably no surprise that almost a quarter of self-employed people in Australia have zero super. You may not have to make contributions, but you should – if you don’t want to be eating baked beans on the daily in your retirement. (And thanks to compound interest, the earlier you start socking it away, the better.)
  3. Get a good accountant (and pick their brains). They’ll be able to clue you in on your home office deductions and the percentage of your how much of your rent, utilities, car expenses, telephone and internet you can claim without landing yourself in hot water.
  4. Set aside ‘housekeeping’ time. Once a week, factor in time to send invoices, chase outstanding ones, enter receipts and pay bills. It’ll help keep your cash flow steady and you won’t have a heart attack when tax time rolls around and you have a shoebox of receipts to deal with.
  5. Ensure you’re charging market rates. It’s tempting to charge less at first to land work, but this also comes under the whole ‘start as you mean to go on’ thing. Research what your peers are charging and check out our pay rates report 2019, available free in the Toolkit.
  6. Make chasing payments a priority. Creating a system for chasing late payments is key in maintaining your cash flow. Some accountancy packages have built-in reminders (like Rounded, which offers discounts to RL members and Gold members). We’ve also written about what else you can do if things get hairy on the outstanding payment front.
  7. Factor in your holidays. That might mean dusting off your calculator to work out how much you need to earn over 10-11 months in order to have 1-2 months off each year (instead of simply hanging out for public holidays).
  8. Keep track of expenses. You can do this with our income tracker (an excel spreadsheet) or your accountancy program. A great tip if you’re not super-efficient entering in receipts is to jot down the legitimate reason for the expense on the back of every receipt (meeting, work trip, etc) rather than relying on your memory.

What are your tax tips for freelancers – or the tips you wish someone had given you when you started freelancing?

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Leo Wiles

Leo Wiles has worked as an editor, journalist and PR for over 20 years before recently retraining as a photographer. These days, she spends her time behind a lens, juggling her own clients with her work at Rachel's List, and her three gorgeous but lively kids.

4 responses on "ASK US WEDNESDAY: “Your top tax tips for freelancers?”"

  1. Tom says:

    Great post! Rounded is an absolute life saver. If you are a freelancer and aren’t on Rounded, I don’t know how you live.

  2. Such sound advice – especially the part about putting aside 30%! (I swear I’m going to do that from this point forward, honestly.) In terms of super, if you’ve got a MyGov account, it’ll show you whether there’s a pile of cash floating around out there in a long-forgotten account. If you haven’t got the wherewithal to contribute at the moment, you might be able to feel better about it by rolling that into your current account. (So, you know, you’ve at least done something!)

  3. Rachel Smith says:

    Agree, Mariella! The 30 percent is an absolute MUST – you only forget to do that once when a big BAS bill rolls around. And totally agree too about consolidating your super so you pay less fees.

    Some bank accounts let you do a ’round-up’ thing where it will round-up your purchases to the nearest dollar or $5 and funnel the extra into a separate account. It really builds up over time and you can funnel that into your super in a lump sum too.

  4. Rachel Smith says:

    I feel the same, Tom – it totally changed my work life and how I handle my money, invoicing, quotes etc.

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