Newbie Sole Trader (IT Contractor) high level setup pathway

Question

Hello all,Yes, another newbie here :)I am going through a lot of material/training/wiki/howto/videos etc etc, but I have a few questions on how to proceed, in my specific case.&nbsp;I recently moved from a PAYG employee to a contractor role, where I get my wages paid, which includes GST and SUPER. I've been PAYG since July 2023 to Nov 2023.&nbsp;I have a dedicated business bank account. I have been paid for 2 invoices so far. I transferred these amounts to my business account.&nbsp;I am trying to figure out how to pay myself. i.e. remove the GST, SUPER and INCOME TAX from my wages and pay myself the balance. I assume I need to record tax paid to date, somewhere, so the correct tax will be calculated?I have setup bank feeds, but it has not picked up the transfers I made prior, do I need to upload a statement rather?What is the high level process to get MYOB setup so I can slice these 2 invoices up correctly?&nbsp;Really appreciate any pointers.&nbsp;

tracey_h · Answer

Hi&nbsp;dudleygb&nbsp;
&nbsp;
Thanks for your post and welcome to the Community Forum.&nbsp;
&nbsp;
I'd recommend speaking to your accountant about this to ensure you are meeting the ATO obligations for your business structure.
&nbsp;
Generally speaking, a sole trader pays income tax on the business income and can't be an employee of the business. This means that invoices would be entered as sales and allocated to income account(s). Any expenses would be entered as purchases and allocated to expense account(s). If you were registered for GST, your BAS would be calculated based on the income and expenses entered. *This is general information so please do check with your accountant.
&nbsp;
As sole traders can't be employed by the business you would need to check with your accountant about private drawings and personal super contributions.
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For the transfers done before bank feeds was set up, you can record these manually in the software. If they are transfers between your own bank accounts you can record Transfer money transactions. You'll need to manually reconcile them by ticking them in the Reconcile accounts window.
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Please let me know if you need further help.
&nbsp;
If my response has answered your enquiry please click "Accept as Solution" to assist other users find this information.

dudleygb · Answer

Thank you Tracey,&nbsp;This was most helpful thank you very much. I have deleted myself as an employee and I'll definitely find a tax consultant to help me out with the initial setup and the items you mentioned.I'm just trying to determine if a simple sole-trader setup is worthwhile doing in MYOB as opposed to just using spreadsheets to record income and expenses, super and GST, which I can refer to later for completing BAS and tax returns. I'm trying to see the benefit using the tool as opposed to just keeping a spreadsheet. Maybe using MYOB is just a bit of overkill in my specific scenario.

dudleygb · Answer

Hi Tracey,&nbsp;I have spoken to my accountant and he isn familiar with MYOB and I have been briefed on my tax obligations.&nbsp;I also now have transactions from my bank feed, showing some recent payments made to me for services provided. What is the preferred way to allocate super and income tax? From what I can see I can allocate a specific amount to GST etc until its fully allocated. Do I just make some new account codes then? I cant see one for Super, its not exactly a liability? I know GST and income tax would be liabilities, correct?&nbsp;

tracey_h · Answer

Hi&nbsp;dudleygb&nbsp;
&nbsp;
My apologies for the delay in getting back to you. I can't provide any advice on how these transactions need to be recorded as we're not permitted to provide accounting advice. It also depends on your specific situation.&nbsp;
&nbsp;
Generally speaking, you'd record an invoice for services provided and allocate the total amount to an income account and select the GST tax code. The GST amount is automatically posted to the GST account. Super and income tax wouldn't be allocated on the invoice, they would be separate transactions recorded when they are paid.
&nbsp;
Your accountant doesn't need to be familiar with MYOB, I'm happy to help you with entering transactions. But, he will need to tell you:

does the employer need to pay your super or is that your responsibility
should you include super as a separate charge on invoices
should the total invoice be allocated to income
are you set up to pay PAYG instalments

If you can get me that information I'll be happy to help with entering the transactions in the software.
&nbsp;
If my response has answered your enquiry please click "Accept as Solution" to assist other users find this information.

dudleygb · Answer

Hi Tracey,&nbsp;Thats great, thank you.So, as a sole trader, I am now classed as self employed and I am paid in full services rate plus Super plus GST.As per the ATO, as self employed I can decide when and how to pay super. I also need to hold my GST and income tax.&nbsp;What I've done so far is this.For example I am paid 1100 for services.The bank feed I have setup sees the amount on my bank transactions and I am prompted by MYOB to allocate the amount. I'm basically just allocating 10% for GST using the GST code. My plan was to create a SUPER allocation of 10.5% and an income tax allocation of 33% (to be safe) and the remainder is allocated as nett salary I will pay to myself. Basicallly I am aiming to fully allocate this 1100 to seperate buckets so I can easily track GST, SUPER, income tax and nett salary I pay myself. I havent introduced any invoices as such, I am just allocating traight from the bank transactions. Sound like an ok way to do it?&nbsp;

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Newbie Sole Trader (IT Contractor) high level setup pathway

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