A recognisable trend on the rise is the number of people working full-time while running a part-time business. Thanks to the world wide web in conjunction with innovative technology, never before has it been easier to set up a shop and go global in an instant.
Online interactions, in particular social media has grown to become one of the most pervasive cultural phenomenons in the world. It is estimated that 1.96 billion of the world’s population are active on social media and that number is expected to reach 2.5 billion in 2018. According to the Sensis Business Index, Australians account for almost 20 million (8 out of every 10).
Millennials are one of the major driving forces behind the e-commerce boom as both suppliers and consumers
These figures are a dream for small business owners, particularly those who have a business model geared around e-commerce. Access to potential customers is no longer barricaded by international waters and language barriers. There are no limits to the internet’s reach, people can safely and simply pay for goods and services from any corner of the globe and receive their purchases in a matter of days. Furthermore, e-commerce makes it possible for a business to be open and easily accessible 24/7 without any increase in overheads meaning you can literally make money while you’re sleeping, at no expense. It’s no wonder people are turning to the internet as a source for extra revenue.
Millennials are one of the major driving forces behind the e-commerce boom as both suppliers and consumers. Young people are very click-happy and are often criticised for burying their heads in their phones, but don’t be too quick to judge because it’s quite likely these young innovators are checking their Shopify sales figures instead of refreshing their Instagram feed to see how many likes their latest post has racked up.
Many people – not just millennials – are discovering ways to unlock extra income streams and the easiest ways to do this is to become an online retailer. You might sell homemade candles on eBay, maybe you’ve created a Shopify store to sell pet supplies, you could be a fitness guru leveraging off YouTube, and now that Amazon has landed in Australia you can tap into a pre-existing marketplace to sell just about anything you like. Other notables are AirBnB, Gumtree, AirTasker, and Fiverr which are some other popular means for making an extra quid.
Regardless of what someone is selling or which platforms they use, the end goal for ‘9 to 5’ers’ with a side hustle is to boost their income. Although, the age-old question ‘when does a hobby become a business?’ often leads to the undoing of many attempting to juggle a job and run a business. Reason being, most people aren’t aware of the tax landscape behind running a business nor the rules for declaring personal services income (PSI).
If your bread and butter is a stable job, but you’re also generating income from an online business, it’s important to consider your tax requirements and financial obligations because it’s not as simple as it seems. If you’re concerned about the nature of your hobby/business activity, or if you’re seeking clarity on your reporting obligations, take advantage of Thomson Reuters’ FREE trial to their Checkpoint platform. You will have unrestricted access the world’s greatest tax and finance resources to keep you in the clear.
Quick heads up: If you’re successfully raking it in and begin to flaunt your luxe-lifestyle on social media without declaring your earnings, be afraid, be very afraid because the Australian Tax Office (ATO) is watching. You might have a Facebook page or a website you’ve set up for your business that you haven’t yet declared in your tax return. Or perhaps you’re running an Etsy shop which boarders in the murky waters of a hobby versus business. Either way, ensure you understand your reporting obligations because if a potential customer can find you, then the ATO data doctors can find you resulting in your very own ‘please explain’ letter.
You may be relieved to learn that the ATO only looks at what is publicly available, therefore if you’re concerned they’re becoming a little too intrusive you might consider changing the privacy settings on your social media accounts so that access to what you’re posting is restricted. However, with so much information available online, including selling your second-hand goods on Gumtree, you may still find yourself under the watchful eye of the data doctors. Of course, there’s always the old saying ‘if you have nothing to hide then you have nothing to lose’ however it’s fair to say, ‘prevention is always better than cure’ especially when the ATO are involved.
It seems that while social media is now everywhere, we are still coming to terms with the impact it is having on businesses. This presents both opportunities and challenges for those who are pushing for a plural income. Being in business can offer you many rewards and benefits, but it also means you have additional tax obligations to consider. As your side business grows and changes, your tax situation will too. Checkpoint is committed to providing resources and services that help make running your business easier. Start your FREE trial today.