I AM studying a Diploma of Commercial Arts Interior Design and I am considering registering my business name and setting up an online interiors store. Is this an easy enough thing to set up, to build a website, buy goods wholesale and sell online for a profit? Or am I biting off more than I can chew? The plan eventually will be to combine the two - interiors online and interior design service - once I have graduated.
I think it would be a good idea to get some experience in the workforce before you jump into your own business. Retail is a tough industry right now and there are a lot of people struggling, so you need to make sure you have a niche and can set yourself apart. You might want to consider getting a job and setting up your online store as a part-time gig. The last thing you want to do is graduate and put all your money into setting up a business with no real experience. Find a job that will teach you the basic skills you need to establish your own business and go from there. Trust me, setting up an online business isn't as easy as it looks and even though lots of people are successful in it, there are also a lot of failures. Do what you have to do to learn as much as you can and then have a go at it. Good luck.
I AM a single, self-employed 45-year-old private business consultant working from my home office. The average income generated by my consulting practice is between $250,000 and $300,000 per annum. I am paying off my house, which is valued at about $1.1 million. I have a mortgage of $450,000. My aim is to pay off this mortgage as soon as possible. However, to do this I need to withdraw substantial income from my business, which results in me paying substantial amounts of personal income tax. I do not claim a full-time home office because I am concerned about having to pay capital gains tax on a proportion of the selling price of my house when I eventually sell. What is the best way to minimise my personal income tax and pay off my home loan as quickly as possible? I have been told there would be some complexities in me borrowing substantial amounts of money from the company in order to pay the mortgage.
On the facts you've given I'd say that you're best not to borrow from the company but rather to take your remuneration and make any debt reductions from there. You have a good income, so even after the payment of your income taxes you still have the ability to reduce your debt quite quickly. Do you have an offset account where you park your surplus income? If you don't, you should. Also, are you making monthly, fortnightly or weekly loan repayments? Making repayments more frequently will reduce your mortgage much faster. With regards to the home office, if you claim occupancy costs such as interest and rates you do open it up to capital gains tax. You can, however, claim operational costs such as phone, internet, power, heating and cooling, as well as depreciation on your home-office equipment and furniture. You will need to keep a journal of time spent in the home office as one of the options in determining your deduction is based on time spent combined with a floor area calculation of the office size compared to the house size. The hard and fast rule is to keep good records to ensure that you are getting a deduction for all of your legitimate business expenses.
Mark Bouris is executive
chairman of Yellow Brick Road,
a wealth-management
company and small business adviser that offers products
and services for home
loans, financial planning, insurance, superannuation, investments, accounting and tax: ybr.com.au.
If you have a question for Mark Bouris email it to Adam Cooper at adam.cooper@fairfaxmedia.com.au.
Frequently Asked Questions about this Article…
Is it easy to start an online interiors store and make a profit selling wholesale goods?
Not necessarily. Setting up an online business isn’t as easy as it looks — retail is tough right now and many people struggle. You need a clear niche, sound product sourcing, and practical business skills to stand out. Consider starting part-time so you can learn and test the market before committing all your money.
Should I get work experience before registering my interior design business or online shop?
Yes. Gaining workplace experience first will teach you basic skills — customer service, inventory, pricing, marketing and operations — that are vital for running your own shop. Working while building a part-time online store reduces risk and helps you refine your offering.
How can I combine interior design services with an online interiors retail business?
Many people start the online retail side part-time and plan to integrate design services later. Use early experience to identify your niche and product mix, then gradually combine e-commerce and design work once you have the skills, customers and cash flow to support both.
What are the main financial risks when launching an online retail business?
Key risks include underestimating startup costs, poor product-market fit, strong competition and cash-flow problems. Avoid putting all your savings into setup, build a niche, test demand part-time, and learn from on-the-job experience to reduce the chance of failure.
If I’m self-employed, should I borrow money from my company to pay off my mortgage faster?
On the facts given, borrowing from the company isn’t recommended. It can create complexities. It’s generally better to take your remuneration and use those personal funds to reduce the mortgage, even after paying personal income tax.
How can I minimise personal income tax while paying off my home loan quickly?
Practical steps include paying yourself reasonable remuneration rather than borrowing from the company, using an offset account to park surplus income against the loan, and making more frequent repayments (weekly or fortnightly) to reduce interest. Always keep clear records and consider tailored tax advice for your circumstances.
What home office expenses can I claim without triggering capital gains tax on my house?
Claiming occupancy costs such as interest and rates can expose part of your home to capital gains tax. However, you can claim operational expenses — phone, internet, power, heating/cooling — and depreciation on home-office equipment and furniture without necessarily affecting CGT. Be cautious about claiming occupancy costs if you want to preserve the main residence CGT exemption.
What records do I need to keep for home-office tax deductions and compliance?
Keep a detailed journal of the time you spend working from home and a floor-area calculation showing the office size versus the whole house if you use that method. Also retain receipts for operational costs and depreciation schedules for equipment and furniture. Good records ensure you claim all legitimate business expenses and support your deductions.
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