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dudleygb's avatar
dudleygb
Contributing User
2 years ago

Newbie Sole Trader (IT Contractor) high level setup pathway

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.   I recently mov...
dudleygb's avatar
dudleygb
Contributing User

Hi Tracey,

 

I have spoken to my accountant and he isn familiar with MYOB and I have been briefed on my tax obligations. 

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? 

Tracey_H's avatar
Tracey_H
Former Staff
2 years ago

Hi dudleygb 

 

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. 

 

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.

 

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.

 

If my response has answered your enquiry please click "Accept as Solution" to assist other users find this information.

  • dudleygb's avatar
    dudleygb
    Contributing User
    2 years ago

    Hi Tracey,

     

    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. 

    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?

     

  • dudleygb's avatar
    dudleygb
    Contributing User
    2 years ago

    Oops sorry I forgot to answer those items:

     

    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 - I am paid an amount that includes super, its not indicated on my invoice but it is on my services agreement with the client I am working for. So, in short, yes, Super is my responsibility. 
    • should you include super as a separate charge on invoices - it is default arrangement as per my services agreement that it is included in every amount I get paid. So doesn't need to be a seperate invoice item by default.
    • should the total invoice be allocated to income - I beleive I am to allocate GST, Super and income tax on the gross figure I get paid, and the balance I allocate as salary/income, I can spend. The GST will be allocated to the GST liability, SUPER will be allocated to a seperate income category 10.5%, we will create this item so it can be allocated to. Same with income tax, but it is liability, as in, I need to pay it out to ATO. Sound about right?
    • are you set up to pay PAYG instalments - I am not, but I assume I need to have something to allocate income tax to, and it appears as per ATO website that I will pay this income tax over during tax return time. GST is paid quarterly.