Chewing Pencils

Urbanmonk asked a good question in the my first post about the business of cartooning:

I have a question.. If you have never done any paid work,are tentative about making a go of it etc.. does doing all the necessary tax and business work give you a head start in getting clients?

I know this probably sounds like a dumb no brainer, but Im pretty clueless:)

And how would you judge whether you are ready to take this step? Coz I assume there is plenty of outlay in all the abn sole trader gear. Is that something you would suggest can be done while you still work a dayjob etc?  

This is one of those ‘yes’ and ‘no’ questions!

If the sort of paid work you’re doing is mainly for your local sports club, plumber, chook farm or other such client, then the ABN (in Australia) is not essential to actually do the work. If you’re earning less than $1000 or so a year, the tax office will declare this income as being derived from a hobby and will not require registration for GST (I’m not sure of the exact figure though). In that sense, no the ABN etc is not needed.

BUT, if you’re wanting to take it further, there’s a good chance you’ll land a few big jobs that will see you earning more than you expected. Registering after the face may be too late and get you in a bit of strife, so it’s best to be ready before hand. Becasue of their accounting methods, most of the big corporate clients I’ve had (eg publishing houses, Government agencies etc) ask for my ABN upfront so they can register me as a supplier and enter me into their system. Without the right tax information, you simply don’t fit into their systems and you don’t get the work. So in this sense, yes the ABN is essential.

When I applied for my ABN, and I’m fairly certain this is still the case, it was totally free. The software that I needed to send my reports to the tax office was also free, so in monetery terms there is no cost in getting set up tax-wise. Australian readers can find out more by visiting the ATO’s website here.

If you’re just toying with the idea of making a few bucks from your drawing, I wouldn’t be too worried about the tax stuff - yet. But if you’re serious about it, then get onto it right away. Not only so you can deal with clients, but also so you can start getting your head around all the quirky things that tax man makes you do!