Online project puts cart before horse

I think it would be a good idea to get some experience 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 put all your money into 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. Setting up an online business isn't as easy as it looks and there are also a lot of failures. Good luck.

I AM a single, self-employed 45-year-old private business consultant working from my home office. My practice generates $250,000 to $300,000 per year. I am paying off my house and I have a mortgage of $450,000. My aim is to pay this off as soon as possible. To do this I need to withdraw substantial income from my business, resulting in substantial amounts of personal income tax. I do not claim a full-time home office because I am concerned about paying capital gains tax on a proportion of the selling price when I eventually sell. What is the best way to minimise income tax and pay off my loan as quickly as possible? I have been told there would be complexities in borrowing substantial amounts from my company to pay the mortgage.

On the facts you've given I'd say you're best not to borrow from the company, but rather to take your remuneration and make 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 quickly. Do you have an offset account where you park surplus income? If you don't, you should. Also, are you making monthly, fortnightly or weekly loan repayments? More frequent repayments will reduce your mortgage much faster. Regarding 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 office equipment and furniture. You will need to keep a journal of time spent in the home office. The 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 offering 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 Max Mason at

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