Home business financial essentials
Mastering your business finances will increase your chances of success. When you operate a business from home, you should open a business bank account rather than simply using your personal account. Combining your personal and business finances causes confusion and makes it difficult to keep track of ingoing and outgoing expenses.
Speak to your financial adviser about the accounts, products and services you need to run your home business, then ask your preferred banks for a competitive package.
Financial planning and record keeping
Your business will need a solid financial plan. You can prepare one yourself by using our business planning resources or your accountant may prepare one for you. Thinking through your financial plan will improve your understanding of the financial workings of your business.
Get professional help
As a home business owner you may initially be keen to complete every task yourself to save money and keep control of the business. However, it is good practice to seek professional advice with your finances or you could run into serious legal and financial problems.
Outsource your financials
Always request details of your accountant's qualifications and experience, and contact previous or current clients (preferably home or small business owners) to request feedback. Whoever you engage must have professional indemnity insurance. This helps protect you if the Australian Taxation Office (ATO) discovers errors in the information you provide to them.
Tax deductions are complex and the ATO can impose penalties for incorrect claims. Unless you are fully qualified in this area, we recommend you consult an accountant or financial adviser for help. The ATO's home office expenses calculator gives an overview of the tax deductions you can make when you run a home business.
Learn about tax basics.
Capital gains tax
The ATO's guide for home-based business helps you understand how capital gains tax can apply to you, but this is another complex area best handled by an experienced professional.