Is this you?

or would you prefer a

professional take care of this?

If you are a sole trader, this means that you carry on business on your own. You might employ other staff, but do not have any partners. You might be working from home, and in this case, you should consider claiming home office expense deductions. To claim the full costs of a home study (such as a proportion of your rent or mortgage, lighting, electricity, heating and stationery costs), you must be able to show that your home study is a place of business, not just used for convenience. To establish this, it is best to have the study or studio separate to the house, with a separate telephone line and electricity meter if possible. It is more difficult to claim a home study if you have another office to go to. Here the ATO could claim that you worked at home for your own convenience and therefore could not claim the deduction.

If you undertake paid work or business in the home study, you can claim the running costs of the study, the separate telephone bill, electricity and depreciation on your equipment (such as computer, books, desk, carpet and curtains in the study). This is often a better option than claiming a proportion of your home mortgage as a home study; if you do this you will lose the equivalent proportion of capital gains tax exemption for your main residence.

You will probably also use a car for work purposes. As it is legally impossible to employ yourself, fringe benefits tax is not an issue. However, to claim the work-related expenses relating to the car, you must keep appropriate records, including a log book. In other words, you need to substantiate all your business expenses.

If you have tools of trade, you can depreciate these items. The cost of employees' wages is claimed as a tax deduction against the income that you earn.

If you are a sole trader, you cannot split your earnings with your partner or spouse. To do this, you must be in partnership.

Personal Services Business (PSB)

To be classed as a PSB, you need to satisfy the results test or the 80% rule.

To satisfy the results test, at least 75% of the personal services income must be income for producing a result (such as producing computer software rather than working as a programmer) where:

• The individual supplies his/her own tools of trade
• the individual is liable for the cost of rectifying any defect in the work

In other words, the personal services income earner is an independent contractor and not an employee.

Alternatively, you can satisfy the 80% rule, where no more than 80% of the personal services income is earned from one single client plus one of the three other tests for qualifying as a PSB. These are the:

• unrelated client tests. You must gain income from two or more entities as a result of public offers (for example, advertising)
• employment test. At least 20% of your work must be performed by employed persons or
• business premises test. The Business must be conducted from premises which are used exclusively for business and which are physically separate from the home or an associate's premises.

Tax Return Checklist

Details of all income & expenses, bank statements, cheque butts, deposit books and details of all assets used in the business and their cost etc.

Copies of all BAS Statements

So, why not let a professional do all this for you and let you get on with what you're good at??

An accountant is having a hard time sleeping and goes to see his doctor. "Doctor, I just can't get to sleep at night." "Have you tried counting sheep?" "Yes, but that's the problem. I make a mistake and then spend three hours trying to find it!!!"