Tax Invoices for Aussies, But Probably Others As Well

[Joshua Uebergang]

Here's what I'm doing. It's basically web design and management for a VERY targeted niche: professionals of a certain sport. Basically, I've been running a site for my brother in this niche and other pros want me to help them out by setting up a site, similar to my bro's site. Because I've just started a company, I want to do it legitimately i.e. tax, etc.

Here's what will happen:

- I'll have a simple site with all the info for the pro.
- Charge an upfront payment to get the site going.
- Charge a recurring monthly fee for maintenance, which is substantially lesser than the upfront payment.

How would I do this in a way that not only works, but is suitable for tax reporting?

The pros would like to claim this as a business expense.

My thought would be to accept the upfront payment using something like 2checkout or PayPal, but I'd also have setup another payment with a monthly subscription via PayPal. How would this work out tax wise?

[Dan Thompson]

We do a similar thing with local sports clubs, we use a modified version of the WHMCS script to store all client details, hosting account details, domain details and so on.

We then set up a product with a one time fee (the initial website), then a recurring fee for the on-going costs.

The script generates, and emails out invoices x days before the due date. The client then pays the invoice either automatically (PayPal, 2CO etc.) or offline using cheque or bank transfer.

When payment is received the PDF invoice is marked as paid and a copy sent to the client via email so they can print it off and claim it as a business expense.

The script then saves all transaction details (initial payment and recurring), fee's, costs etc that we can use to work out our own income, tax to pay and so on.

So in short, if you have a good script running the back-end of things you'll be fine!

[Joshua Uebergang]

Sounds exactly the same Dan!

I have fantasos (jvmanager 2), but I don't plan to use any Customer Relationship Management software to manage this because it would be for about 5-10 people. Maybe I should use fantasos for this - I'll ask in John's forums.

It seems I would not have to issue a tax invoice for the reoccuring payments because they are under $82.50 (the minimum amount before a tax invoice must be issued). As for the upfront payment, because it would only ever be done a few times, I should just do it myself.

Other aussies have input?

[Joshua Uebergang]

One other thing I should have added is I noticed that an invoice can be sent via PayPal. Maybe that's a good option for the onetime upfront payment.

[Quentin]

The best thing Joshua is get advice from your accountant. If your customers are in Australia you will need to issue a tax invoice with included GST and also include your ABN number.

All this comes into play when you earn a certain amount but as the rules keep changing get the advice fro a proper accountant otherwise if you do well and the tax office decides to do an audit on you it could mean trouble.

Never take advice from someone on the net as they probably don't know the right procedure.

Quentin

[Joshua Uebergang]

I have asked an accountant but this isn't a tax issue. It's more of a "how to". I've always wondered if online marketers ever comply with GST and other taxes related to geographical reasons and if so, how they did it.

[Quentin]

Well this is how I do it. I have a GST component on all my products and if I am doing promotions in Australia I pay and claim GST on it all. If not in OZ it is entered as a export sale.

As for the invoicing they get an email and asks them to request an invoice which I spit out on MYOB and email it to them if they want it.

Quentin

[peteinoz]

Originally Posted by Joshua Uebergang

I have asked an accountant but this isn't a tax issue. It's more of a "how to". I've always wondered if online marketers ever comply with GST and other taxes related to geographical reasons and if so, how they did it.

this is what we do..

we do it all via Paypal IPN.

The IPN knows which country the payment comes from

All our data is stored in a database.. the prices for aussie and all other customers are the same price, though we account for 10% gst for customers from AU only , this amount is stored in our database.. which we print up as required for my accountants.. from this the accountants get the amount of sales and how many were aussies and how much GST etc..

From a business perspective, Ive advise you to download your paypal transactions once per month.. since all your customers are already Aussies and you know that. Its pretty simple..

With the size of your new business, thats all that is required. Wait till your making a lot of income before you t hink of automating it.

Cheers

Pete

[Joshua Uebergang]

Thanks Quentin and Pete. A combination of those tips exactly solves my problem. I'm not registered for GST at the moment so I don't need to do it now, but I know what to do when I soon will register. Cheers.