I'm considering starting up a WFM business of retail goods which would be both online and local pick up. I would start out advertising on BSS sites then look at developing a FB page if it took off. I'm aware if I register a name I'm legally a business and therefore have to do ATO stuff. I'm not wanting to do that yet until I know I can make a go of it. So I have a few questions:
Can I set up a FB page with a personal ABN number, not a registered name but name the FB a name? So I might have Delirium Flowers, but with a personal ABN?
I've been told by lots of people it's considered a hobby by the ATO until profit a hit 5k, thus how Avon/Scentsy type businesses are so attractive. But reading govt sites it says you are a business if you even *intend* to make a profit, therefore you need to register business name etc. Is it enforceable? Can someone shed some light?
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30-08-2016 15:26 #1
New home business questions
30-08-2016 15:57 #2Member
- Join Date
- Apr 2011
When you say personal abn, do you mean getting an abn as a sole trader? Unless you are going to set up a separate entity like a company or trust, that first abn is the same one you will always use for your business. As for the 5000 threshhold, as soon as you make 1 dollar profit it is taxable (assuming your taxable income is already over the 18k threahhold). Have a look at the ato website, there is a pile of fact sheets and other info for small business. It may be worth talking to a tax agent before you go too much further.
Last edited by tb2; 30-08-2016 at 16:01.
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30-08-2016 16:25 #3
Intention to make profit is quite difficult to prove (by the ATO). It isn't the sole test, other factors have to be considered. Eg systematic transactions, records and activity. Making "profit" doesn't necessarily constitute a business. Neither does setting up a business name.
An example of an activity which makes profit but is not a business is where you buy some item for personal use, eg a pram, and then change your mind and decide to sell it on eBay, and you sell it for more than you bought it for. If you do this on a regular basis (ie systematic) then it would constitute a business but if it's one-off, or a number of random transactions, eg selling a pram, then selling a dress, then a car seat, etc, then it isn't a business and the $ you get is not taxable income.
Similarly, if you regularly knit baby outfits and you decide to sell some of them online but the activity is very low and you're not make much money, it could be deemed a hobby, not a business.
It's not exactly black & white.
Having said that, what you are describing sounds like you really want to make a go of running a home business, so why don't you just do that? You don't need a registered business name to run a business and if you quote your ABN on the sales you make or on your website then you are basically admitting that you've got a business.
If you want to do it and make money, then that unfortunately involves declaring it in your return.
30-08-2016 16:52 #4
The other thing to think of is if you start with declaring your business from the beginning its highly likely you'll make a loss on the first year/two years. This can then be carried forward and offset future profits when you do make a profit.
30-08-2016 16:53 #5
Thanks for the replies
I'm a SAHM and don't have any taxable income, so any profit up until the threshold wouldn't be taxed.
It's not that I'm deliberately wanting to defraud. It's not wanting to pay for a business name and do all the business/ATO paperwork if it doesn't take off. Is it worth it to do quarterly BAS statements for a grand a quarter? That's what I'm trying to work out.
30-08-2016 17:09 #6
Last edited by SSecret Squirrel; 30-08-2016 at 17:12.
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30-08-2016 17:33 #7
This is all so helpful. So no GST, and only annual BAS, that's not too bad.
30-08-2016 18:26 #8
You can register a business name to your ABN in your personal name and I think it's about $79.
30-08-2016 19:19 #9
New home business questions
If you just set up your business online using your ABN and earn less than $75k a year, the only paperwork required will be giving a spreadsheet of your income and expenses to your accountant at the end of the year. The business activity would be part of your individual tax return.
Last edited by witherwings; 30-08-2016 at 19:21.
30-08-2016 19:20 #10
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