Accounting for the gig economy
Uber, Airbnb, Elance, and Airtasker: these services are the new face of a fresh and expanding mode of employment dubbed the ‘gig economy’.
This old yet modernised way of working, in a freelance-style capacity, poses some interesting questions about tax, accounting and compliance.
So if you are involved in driving Ubers or helping people with odd jobs on Airtasker, how do you manage both your finances and tax responsibilities? What even are your tax responsibilities?
The primary mistake I see is people treating their new endeavour as a hobby or side gig, not realising they have a genuine business on their hands.
You really need to treat this as you would any other small business, meaning whether you are renting a room, giving people rides or delivering parcels, you better be aware you are running a business in the tax man’s eyes.
1) Keep good records
This is paramount. You should be recording all income alongside business expenditure. Many sharing business platforms, such Uber and Elance, take on the income collection themselves, recording and depositing into your account on your behalf. You still however need to record business expenses ready for the Income Tax filling every year.
2) Use accounting software
Don’t be a Wally and think you can run this on excel! Do yourself (and your bookkeeper) a favour by getting yourself a good value, comprehensive MYOB Singapore Accounting software . This takes all the hassle out of record keeping and tax readiness as it automates almost any type of business transaction. Whatever you choose make sure it’s mobile ready and only costs you what you really need to pay.
3) Keep accounts separate
Its easily done – you think you can weed out all the personal from business expenses… but it’s a thankless and error prone task. Get a business bank account with a separate card as a priority. This separation makes it an almost brainless task to know whether that was a business expense or a personal one. Keep it clear from the outset and accounting at year’s end will be a simpler affair.
4) Know your GST responsibilities
Generally speaking, a freelancer or ‘gig employee’, only needs to charge and deal with GST when they earn over $1m a year.
5) Speak to a bookkeeper
To take out the hassle and uncertainty it pays dividends to form a good relationship with a bookkepper you trust. They will know exactly what you need to be aware of and how to be prepared – its their job after all! They will also be instrumental come tax time when you submit data from your accounting app for tax preparation.