Wednesday, March 28, 2012

I hate the tax man. How original is that?

Yesterday I saw my accountant to sign off on my company income tax for the previous financial year. I always leave it fairly late as I never have the money to pay the poor man! (Poor? Accountant?  Well, you know what I mean)

I'd given him the books two weeks ago, confident that last FY I'd made a loss. I have a client who owes me around $13000 and most of that was for last FY. As I had to spend my own company's money buying resources for her such as stock photos it was looking good for a loss.

While most of us want our businesses to prosper, I'm in the uncomfortable situation of running a business with a low turnover despite my best intentions. A good year will see a turnover of $50K, out of which I have to pay bills, tax, and wages for myself. There is nothing, repeat nothing, left in the bank at the end of each financial year - or each month come to that. I do have a good regular client who pays me on the first of each month, and that's usually around $2700, which makes up the bulk of what I earn.

Given that cash flow is so tight the last thing I want to do is make a big profit as I'll get taxed to buggery. I always try for a loss or break even.

You can imagine my despair and astonishment when my accountant told me yesterday that I'd actually made $8K the year before.

"How?" I wailed.

I'm crap at anything mathematical and not great with Excel, my chosen software for my accounts. I'd added up my sales for the four quarters but apparently missed out one of the quarters. Curses!!!!

So now the tax man is going to slug me for $2118 straight away, as well as Notional Tax for the current financial year. The tax man assumes I'm going to make the same sort of profit this year - ha! I doubt it, Ill be spending too much on taxes! - and wants $679 a quarter, When I lodge my next BAS I'll be hit with a bill for $2037 for three lots of notional tax dating from 1 July 2011.

That's $4155 I don't have. I already owe $1332 for my BAS which was due on 28 March, but have $400 in the bank so won't be paying that until 1 April.

Then there are the accountant's fees of $1850. Luckily he lets me pay this off over several months.

It's an understatement to say I am extremely depressed today. I am tempted to lock up the knives and throw the key down the drain, just to be on the safe side.

It's bloody impossible for small businesses to get ahead, it really is, with the tax man slugging you for everything he can. Especially businesses with such a small turnover as mine. I did have some money put aside for tax earlier in the year but had such a lean January I had to use it to live on and pay regular bills with.

The only thing that stops me from winding up the company and getting a 'proper' job again is that my depression at the thought of having to leave the house and animals every day, toil away in an office with other people all around me, bound by KPIs, bosses, rules and regulations, hemmed in by traffic morning and night, moves up to suicide pitch.

Come on universe, send me a nice big juicy project from a client who is prepared to pay me what I'm worth rather than screw me down to rock bottom for a first-class job. Give us a $10K project, universe! Please?


  1. Its always a sad time when the tax man comes around, like you arithmetic isn't my forte, so sad that yours was out by so much, ouch!

  2. What's really annoying is that the extremely rich hire extremely clever people who can ensure they pay minimal tax or even run at a loss. The honest ones among us are the ones who pay. Grr.

    1. Yep and we are much easier targets as well! No expensive lawyers to protect our assets!