What can businesses do to make next year's tax return easier?
We all know that anything related to tax and tax filing is a tough subject. What can businesses do throughout the rest of this year to turn their next year's tax filing into an easier process?
I find that many small business owners are all too busy working in their business with no time to work on their business. This said I have a number of dot points below to assist with helping to make the process of lodging the tax easier.
Keep personal and business 100% separate.
Too many Mum & Dad businesses and sole traders do everything in one bank account and credit card.
- Personal bank account + credit card
- Business bank account + credit card
Receipts fade all too easily, get lost, or misplaced. Anything over $84 requires a receipt to claim it.
- ATO has a free MyDeductions app you can load on your smartphone if turning under $50k year
- Use Google Drive, Dropbox, or Evernote to take a photo of all your receipts.
- Quickbooks Online, Xero and MYOB are the three most popular software options in Australia
- Use their smartphone apps to photograph/scan and record all your deductions
- Use their email address to fetch invoices from regular expenses like Telstra, Optus, AGL etc..
- Data feeds
- Bank statement fetching
- Bank rules and match receipts to bank data
Matching your receipts to bank feeds is NOT reconciling your bank statements.
Accounting software is the tool, but your physical bank statements are the bible.
Your accounting software balances must match to the cent and date to your bank statements.
I recommend monthly bank statements.
Then book your bookkeeping in, as you would a client for one afternoon of every week to keep on top of your bookkeeping. Set a time each and every month after you obtain your monthly statements to reconcile it.
100% claim all your deductions accurately
Save your accountant time
Annual lodgements should be faster and cost less as you are doing all the bookkeeping
Know where you stand financially at any given month
Peace of mind should the ATO audit you, as you have all your essential records already on hand in the accounting software.
Would be great to hear your thoughts @Amanda Hoffmann - Certified Bookkeeper, BAS Agent @Stuart Reynolds @Mark Chapman