Many business owners don’t actually run a business, they just work a job while trying to avoid paying PAYG.
A job is a paid position of regular employment. A job is where, for a financial return, you work for someone who is running a business or an organisation. A business will be using your work to make money. If they don’t make more from your efforts than you do, then the job and probably the business won’t last too long.
Running a business is different to a job, because a business owner carries out a commercial activity, to produce a profit that will represent their income or the shareholders’ income.
The confusion often comes when the business owner, like the 1.2 million business owners in Australia, is the only “worker” in that enterprise. Most of these 1.2 million business owners are “accidental” business owners and would perhaps have preferred to stay an employee, but so many industries from construction to IT now only want contractors.
So, when the new business owner first gets paid, say on a contract, there can be confusion – the amount may look good, but allowing for GST and income tax, a lot of it doesn’t belong to the business – it belongs to Canberra. Top that off with all the myths about what you can claim on tax, and you will understand why we see a lot of business owners absolutely shocked at what they may owe the ATO after a couple of years of non-lodgement.
Of course, if you have a job, then the tax, the insurance and all the red tape is dealt with by the boss. You work and what you get in the bank at the end of the week is all yours.
Even for the “one-person band” a business is full of red tape and paperwork pain. In the Your Business Angels accounting firms we have removed massive red tape and time with the implementation of the Precis accounting system. We decided that for a business owner having no accounting at all to do, having the compliance completed on time, and the reports and accounts produced monthly was the best thing. No accounts – no risk of late lodgement, means that our clients can get on with running their enterprise, making more money and being in business.
We see clients who make the mind shift from employee to business person start to incrementally improve their financial position and move ahead. So if you are still thinking job but run a business then you should be contacting Your Business Angels to move ahead.
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