It will be a wrap on the financial year 2021 by July when all the applications for income tax deductions will be processed. The last couple of years have been rough for many businesses, to say the least, but the self-employed individuals had to suffer a heavier blow.
But, at a closer look, we have found out several essential financial lessons which could be learnt from the past!
Where to begin?
Let’s take a step back and watch a rewind of all the financial obstacles that the self-employed, freelance and gig working community had to face:
Business favours
There came a very low point around the end of 2020 where resources to maintain your independent business, whether rideshare or freelance consultations, were priced very high. There is no shame in admitting that several small business owners decided to do one another favours to keep things going.
The same behaviour was passed on to April of 2021 when things finally started to get a bit more normal. The problem with business favours is that:
- Exchanges of services or products between businesses are not counted as real business income (or expense)
- If a business favour expensed does not cross a certain threshold it cannot be filed for tax deductions
- The part of your services or products exchanged in a business favour will not be counted as production and it will be difficult to tally year on year growth
Insufficient resource planning
You did not save a pool of money to smoothly run your business even if you were not earning profit for a long period of time. Honestly, that is the worst that can ever happen and nobody had expected it to become reality.
How to check if you might run out of resources in case of an economical hit?
- Your profit rate remains the same while your production rate (or simply the number of customers you have, the number of trips or deliveries you finish) is increasing.
- You are only able to save 10% or less than 10% of your weekly/monthly income
- Your business expense budget is gradually decreasing
Time management
Managing your time during work is crucial whether you have to hit a low point in your business or not. If time is not efficiently managed you will eventually lose money.
Lack of time management can be identified as:
- Inability to finish a task within the given deadline
- Piling up of unfinished tasks on top of the ongoing tasks
- Lack of or no personal time, breaks or breathers at all
- Fatigue and loss of focus
- Inability to differentiate between the time taken to complete different tasks
Remember, you cannot manage time by dividing the entire day into equal hours for every task. Try to monitor how much time each task takes separately and then allot time accordingly. A healthy routine is never monotonous!
How to best prepare against these odds?
It’s shocking how simple the solutions to these problems are! You can overcome them easily by building healthy business habits.
Preparing for a fresh financial year will first lead you to recognize that your business needs reliable assistance to grow. Hard-work and passion need to pair up with smart-work and organization to flourish financially.
Here are the things you need to find time for and grow the habit of:
- Time tracking (as well as mileage tracking for rideshare and delivery workers)
- Invoicing and expense tracking
- Multi-managing tasks but not overlapping one with another
- Setting clear income goals and budget with an achievable deadline
- Allowing flexibility, breaks and breathers in your work time
Do I have to do it all by myself?
The most difficult part of being self-employed is that you are alone in the journey. But that also makes you your own boss! You have to decide if you want to be an encouraging boss or one who keeps you from taking risks?
You do not have to do this alone! You have a community which has your back, with active resources to help you with tax and income tips and reward you for your membership!
The MyGigsters app is the no.1 toolkit for rideshare and delivery workers in all of Australia! But did you know that our team has recently launched an exclusive and free toolkit for freelance and self-employed business owners?
Sign up today and start using Gignition by MyGigsters, a toolkit that manages customers, tasks and projects, tracks time, income and expenses, auto-generates invoices, bills and tax reports and lets you do more with less!
