The end of financial year need not be a time of deadlines and stress. Worrying about the amount of taxation you will have to pay the Australian Taxation Office, or where you stashed all those loose receipts.
As you make money in your business, there will also be a number of deductions that you claim to offset that income. The ATO (Australian Taxation Office) acknowledges and allows these deductions. The question I ask is this: Do you as a business owner utilise these deductions correctly and fully?
The ATO has updated their webpages to help small business owners understand the line in the sand as to what is personal and what is a legitimate business expense. The Aussie attitude of she’ll be right mate is all well and good until you are sitting across from a tax auditor.
See ATO website resources below
How can you ensure that you claim each and every deduction as well as keep personal expenses separate?
1. Use technology
The internet is accessible just about anywhere in Australia. As such, you can use your smartphone or tablet over the course of your working day to capture your receipts. If you want a inexpensive option to ensure you do not loose any receipts, you can set up a free dropbox account and upload the dropbox app on your phone. Keeping a record of your receipt is as easy of taking a photo. It also allows for you to have a visible receipt that will never fade. (See my article Small Business Tools Dropbox)
2. Use Online Accounting & Add ons
Myob, Intuit (Quickbooks), Xero, Zoho, Cashbooks there are many out there to choose from. They all have their advantages and disadvantages. My favourites are Myob Essentials and Xero, because they both have a number of plans to suit the needs of most small business owners and they are not expansive.
How does using an online accounting program like Myob or Xero allow you to keep a record of your deductions?
Both have the option where you can upload a photo of your receipt and attach it to your bookkeeping transaction. Should you be audited, when you get your End of Financial Year tax completed or you need a copy of the original receipt for a warranty claim it is saved. Xero even has a phone app that will allow you to upload and record your receipt, but you will need to fill in the details.
3. Data Entry as easy as taking a photograph? I like that!
Many online accounting programs have addons or additional programs that talk to each other. These addons can save you hours of data entry. How so? You have an app on your phone, you upload a photo of your receipt and the addon attached to Xero or Myob fills in everything else. What do I mean by everything else?
The addon program is updated with rules for each and every supplier you have. Their tax code, do you pay their bill by direct debit or by credit card, is there gst or is it gst free? All of this is preset, syncs into your accounting software and it is there at the end of the week or month to complete your bank reconciliations.
I know of businesses that have lost thousands of dollars a year, simply because they lost or failed to claim all their expenses.
Add on the fact that without these deductions you will have a bigger profit at the end of the year, this means you will also pay more tax.
If you want to know more about how you can simplify your business, save time and keep up to date with your bookkeeping please do not hesitate to contact us.
We are happy to offer you monthly or quarterly bookkeeping packages, OR we can set you up and train you how to manage your own bookkeeping.
Check out what we can offer you on our services page, contact Amanda on 0423463721 or request more information by clicking the blue button “request more information”
BAS Agent and Bookkeeping