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More than one million Aussies run their working lives from their homes. If you plan to join them, or if you’re trying to achieve the perfect work-life balance, here are five handy things to know.
It is possible to run a home business without local council approval, provided your operations won’t impact your neighbours. However, the rules vary between councils, and you may need additional permits and approvals. Be sure to check with your local council about restrictions that apply to your type of business and your area. Also, do your homework on what you’ll need to do around things such as your tax obligations, licences and insurance. State and federal government websites, along with the Australian Taxation Office (ATO), are often good sources of information and advice.
If you have the room, having a workspace that you can close off is ideal, allowing you to shut the door on work (both physically and mentally) at the end of the day. Depending on your needs, this could be anything from a desk area in a spare room to a dedicated study, a converted garage or a purpose-built studio. Will customers need to visit you? In that case, a separate entrance that saves people traipsing through your home to your home office could be an important addition.
The cost of renovations to transform an area of your home into your place of business may be tax deductible over a period of time*. Keep in mind that running your business from home could also affect your capital gains tax main residence exemption if you sell your home at a later date. Consult a registered tax professional to gain the best advice.
For desk work, you’ll need a chair you can position at the right height for the kind of work you do, good task lighting and plenty of storage. If your home office is the dining table, have a storage box or cupboard to hand where you can pack things away at the end of the day.
For tax purposes you’ll need to hold on to most records, such as invoices and receipts, for five years (sometimes longer) from the date you lodge your tax return**. However, the ATO now accepts digital records, helping to reduce the amount of paper in a typical home office. Check out the free record-keeping app MyDeductions on the ATO website.
Depending on the nature and size of your home-based business, you may have to invest in extra security measures. These might include screen windows so your gear is out-of-sight, strong door and window locks and, for extra security, anti-theft deterrents such as motion-activated cameras and lighting.
An alarm that can be linked to a monitoring service, particularly if your job requires you to be out and about a lot, is also worthwhile. Secure tools in lockable cabinets and essentials in a sturdy safe. It’s also good practice to speak with an insurance broker, as most home policies don’t cover business equipment and activities. Business insurance is usually a tax-deductible expense.
When setting up a business, it’s important to establish clear procedures from the start. Keeping good records makes it easier when it comes to tax time. Set up a separate bank account for your business, which helps to develop an auditable financial trail and provides boundaries between personal and business spending. A business-only mobile phone is also a worthwhile investment as it will save having to work out personal use (which isn’t tax deductible) from business use (which generally is).
For business-related expenses, any deductions are required to have a direct connection to actual business income – check with your registered tax agent as to exactly what is allowable and keep receipts you can produce when required. Bear in mind that tax-deductible expenses are not free money received back at tax time; the true cash benefit is going to be relative to your personal income tax rate, which will differ from business to business and may only be 20 to 30 percent of the full expense amount paid.
The ATO website has information on record-keeping and income, and deductions for specific occupations, which can give you a good grounding, but for expert advice pertaining to your exact circumstances, always consult a qualified professional. At tax time, speak to a registered tax agent to get tailored advice on your unique business circumstances***.
Check out our guide on how to install window film.
Photo Credit: Getty Images, Cath Muscat
Asbestos, lead-based paints and copper chromium arsenic (CCA) treated timber are health hazards you need to look out for when renovating older homes. These substances can easily be disturbed when renovating and exposure to them can cause a range of life-threatening diseases and conditions including cancer. For information on the dangers of asbestos, lead-based paint and CCA treated timber and tips for dealing with these materials contact your local council's Environmental Health Officer or visit our Health & Safety page.
When following our advice in our D.I.Y. videos, make sure you use all equipment, including PPE, safely by following the manufacturer’s instructions. Check that the equipment is suitable for the task and that PPE fits properly. If you are unsure, hire an expert to do the job or talk to a Bunnings Team Member.
