Periodically on the Virtual Assistant forums we discuss items that relate to how the tax department would view us if certain scenarios arise. One of those is the number of clients we should have or the how much we’re earning from clients. While the figures and percentages may differ from country to country, I believe it would be wise to make sure that you are not receiving the bulk of your income from one client only. In the early stages of your business this may be difficult to achieve but it should certainly be your goal. Why?
- If a large percentage of your income was derived from one client you might be perceived as an employee by your tax department. It is in both your interests and that of your client, to ensure this situation doesn’t arise otherwise your client might find themselves responsible for your taxes, insurances, sick leave, etc and you might find yourself in a totally different taxable position than what you envisaged.
- With the current economic climate it makes sense to spread your income sources so that if one source dries up or is no longer available, you still have other sources for income provision.
These are just two simple reasons and I’m sure there are a lot more, but it makes good sense to protect yourself, your business and your income, by ensuring you are not dependent on one source or one client. Believe me I know as I did put myself in a similar position many years ago early in my business. Whilst I did have quite a few other clients, I had one client who was providing me with a large percentage of my income. At that stage our industry was still fairly new and I hadn’t yet worked out the value of outsourcing to my colleagues to spread my workload. When my major client and I parted ways I nearly lost my business too. It was a big chunk of income that suddenly went with the client and I had to scramble around to find new clients – I had a quite a few lean months till I filled that gap in – not with another client, but with several clients.
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Kathie is the owner of VA Directory and is former past President of the Australian VA Association. She founded the Virtual Assistant industry in Australia in the mid 90s, having already been operating a home-based secretarial service. Today the VA industry covers a multitude of office-based services for clients worldwide.