What Tax Rate Applies to a Second Job

August 14, 2023
6
minutes to read
by
Michael Nuciforo
Contents

The gig economy has gained immense popularity in today's dynamic work landscape, offering individuals the freedom and flexibility to work on their own terms. With the rise of gig work, many people are embracing the opportunity to explore multiple income streams through freelance projects, part-time jobs, or running their own businesses. However, along with the exciting possibilities comes the responsibility of managing taxes and ensuring compliance with the Australian Taxation Office (ATO). In this blog, we will delve into the world of multiple income streams and explore the tax rates that apply to them. So, let's dive in and discover how you can easily navigate the complexities of various income streams.

Rise of Gig Working

In recent years, gig work has experienced a remarkable surge in popularity, revolutionising the traditional notion of work. There are several reasons behind the widespread embrace of gig economy opportunities: 

Flexible Hours

First and foremost, gig work offers unparalleled flexibility. Unlike traditional nine-to-five jobs, gig workers can set their hours and choose when, where, and how they work. This level of autonomy allows individuals to design their schedules around personal commitments, family responsibilities, or other pursuits they are passionate about. 

Diverse Work

Another key advantage of gig working is the ability to explore multiple interests and skill sets. Rather than being confined to a single job role, gig workers can take on diverse projects that align with their passions and expertise. This adds variety to their work lives and presents exciting personal and professional growth opportunities. 

Income Potential

Finally, gig work has the potential to boost income. Individuals can increase their earning potential by leveraging multiple income streams and achieving financial security. This is particularly beneficial for those with specialised skills or knowledge that can be monetised across various platforms or industries. 

However, gig work also comes with its challenges. One of the major hurdles is managing multiple income streams and ensuring compliance with tax obligations. Income, expenses, and tax considerations become more complex with each gig or business venture. 

This is where Thriday proves invaluable. Thriday simplifies income tracking and expense management across all your gigs and businesses by automating accounting processes. It empowers you to focus on your work while leaving the tedious bookkeeping tasks to a reliable and efficient system.

The following section will explore strategies for effectively running multiple businesses and delve deeper into the tax rates that apply to second income streams.

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How to Run Multiple Businesses

Running multiple businesses, whether separate ventures or different side hustles, requires careful planning and organisation. Successfully managing multiple income streams involves implementing effective strategies to ensure each gig receives the attention it deserves. Here are some key considerations to help you navigate the challenges of running multiple businesses: 

  • Separate Records and Accounts:¬†Maintaining different bank accounts for each business is essential. This practice helps track income, expenses, and profitability accurately. By keeping clear and distinct financial records for each venture, you can quickly identify the performance of individual businesses and make informed decisions accordingly.¬†
  • Establish a Schedule:¬†A well-defined schedule is crucial when managing multiple businesses. Allocate specific time slots or days of the week dedicated to each venture. This will help you maintain focus and prevent overlap or neglect of any business. Adhering to a schedule will ensure that all aspects of your business receive the required attention.
  • Delegate Tasks:¬†As the workload multiplies with multiple businesses, consider delegating tasks to competent individuals or outsourcing specific responsibilities. Hiring¬†virtual assistants,¬†bookkeepers, or freelancers can alleviate the burden and allow you to focus on core business activities.
  • Leverage Technology:¬†Automated tools like Thriday can help to streamline operations across your multiple businesses. Integrating technology into your workflow allows you to efficiently manage tasks, track progress, and access essential data from anywhere.

Running multiple businesses can be demanding, but careful planning and effective organisation can also be highly rewarding. Thriday can be crucial in simplifying your financial management across numerous businesses. Its automated accounting features enable you to consolidate income and expense tracking, providing you with a comprehensive view of your overall financial health.

The following section will delve into the tax rates that apply to second income streams, ensuring you understand your tax obligations as a multi-business owner or gig worker.

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What Tax Rate Applies for a Second Income Stream

When you have a second income stream, such as a gig or a side business, it's essential to understand the tax implications and the applicable tax rates. In Australia, the tax rate for your second income stream depends on various factors, including your total annual income and the type of business structure you operate under.

Sole Trader Taxation

If you operate your second income stream as a sole trader, the most common structure for small businesses and gig workers, your business income will be treated as part of your income. This means that the income from your second job or business will be combined with your primary income for tax purposes.

Marginal Tax Rates

Australia operates on a progressive tax system, where tax rates increase as your income rises. The marginal tax rates for individuals range from 0% to the highest tax bracket. It's important to note that your second income stream can push you into a higher tax bracket, impacting the tax rate applied to your total income.

Tax-Free Thresholds

The ATO sets tax thresholds that determine the amount of income on which you need to pay tax. The tax-free threshold for the 2023-2024 financial year is $18,200. If your total income, including your second income stream, is below this threshold, you won't have to pay any tax on that income.

Medicare Levy

In addition to income tax, individuals are also subject to the Medicare Levy, which helps fund Australia's healthcare system. The Medicare Levy is calculated as a percentage of your taxable income and is typically 2% of your income. 

In the next section, we will explore how Thriday can help you track your income effectively, providing you with peace of mind and helping you stay on top of your tax obligations.

How Does Thriday Help Track Income

Understanding the tax implications of having a second income stream is crucial to avoid surprises and maintain financial compliance. That's where Thriday comes in. Thriday is a cutting-edge solution designed specifically for sole traders and gig workers with multiple businesses or jobs. It simplifies tax compliance, expense tracking, and bookkeeping, enabling you to focus on what you do best while ensuring you stay on top of your financial obligations. 

Tracking income from multiple sources can be daunting, especially when juggling various gigs or running numerous businesses. Thriday is here to simplify the process and provide a streamlined solution for tracking your income effectively.

1. Automated Income Tracking

Thriday's innovative platform automates the process of tracking your income across all your ventures. By integrating bank accounts* and payment, Thriday can automatically categorise and record your income, ensuring that every transaction is captured accurately. This eliminates the need for manual data entry and reduces the chances of human error. 

2. Expense Categorisation

Thriday goes beyond income tracking and offers automated expense categorisation. As you incur expenses related to your multiple businesses, Thriday can automatically classify and categorise them, making it easy to monitor your spending and identify deductible expenses. This feature saves you valuable time that would otherwise be spent manually sorting and categorising transactions. 

3. Receipt Reconciliation

Keeping track of receipts can be a hassle, especially when you have multiple businesses or gigs. Thriday simplifies the process by allowing you to upload and store digital copies of your receipts. Its intelligent receipt reconciliation feature matches receipts to corresponding expenses, ensuring that your records are accurate and complete. 

4. Accurate Financial Reporting

With Thriday, you can generate detailed financial reports for your businesses or income streams. These reports provide a comprehensive overview of your income, expenses, and profitability, allowing you to assess the financial health of each venture. This information is invaluable for tax reporting, financial planning, and making informed business decisions. 

By leveraging the power of automation and technology, you can say goodbye to manual bookkeeping and welcome the efficiency and accuracy of Thriday. By signing up for Thriday, you can simplify your financial management, ensure compliance with tax obligations, and focus on what you do best: growing your businesses and pursuing your passions. 

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Key Takeaways

Managing multiple income streams can be complex, but with the right tools and knowledge, you can navigate the intricacies of tax rates and financial management. In this blog post, we explored the reasons behind the popularity of gig work, strategies for running multiple businesses effectively, and the specific tax rates that apply to second income streams. We also introduced you to Thriday, a game-changing solution that simplifies income tracking, expense categorisation, and receipt reconciliation.

Thriday empowers gig workers and business owners with automated accounting features, ensuring accurate record-keeping and streamlined financial management. By leveraging the power of Thriday, you can save time, reduce stress, and gain valuable insights into your financial performance. 

Take control of your financial obligations and join the growing community of individuals who rely on Thriday to simplify their tax compliance and bookkeeping. Join Thriday for free today and embark on a journey of financial clarity and peace of mind. 

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