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Seamless bookkeeping and accounting

You want to avoid paying more than you should come tax time. Part of that is ensuring you have well organised and recorded financial records. When tax time comes around, are you ready or scrambling last minute for missing financial records?

Business owners have a lot on their plate and can easily lose track of an approaching tax deadline or financial data needed to submit returns.

Organisation is key when preparing for tax time. Taking advantage of the many tools and resources available to support small business makes the process so much easier.

Set yourself up for success by following these four pillars of painless tax and business management.

1. Commit to clean bookkeeping

Year-round, effective bookkeeping is the best way new business owners can minimize tax season stress. With the wide range of accounting software available, there’s no reason to be stuck with time-consuming manual methods that leave room for error.

All-in-one options like Xero streamline your most important bookkeeping processes, including:

• Tracking expenses
• Tracking sales and income
• Creating and sending invoices
• Managing bank transactions.

With your financial records all in one place and up-to-date, you’re better positioned to maximise your refund, while avoiding penalties associated with incorrect or incomplete tax returns.

2. Capture every business expense

Many small business owners miss claiming their business expenses, largely because they don’t have a reliable system for documenting expenditures while on the go. Without a receipt, you miss out on claiming GST or a tax deduction, because you don’t have the required documentary evidence.

Make the most of claimable expenses by using a system to record receipt data, track mileage and generate expense reports. As an added bonus, many of these tools sync with your all-in-one accounting software. Receipt Bank and Hubdoc are great options.

3. Separate business and personal

Right from day one, small business owners should clearly divide their personal and business expenses. Differentiating between the two will make it much easier to claim deductions on your tax return – and support those claims in case of an audit.

Recommended steps to separate your business and personal finances include:

• Create a separate bank account for your business, and designate a credit card solely for business purposes (this will help you track expenditures while building up your credit and borrowing power)
• Never combine business and personal expenses (for example, if you buy printer ink for your home and your business at the same time, ask for two separate receipts)
• Pay yourself a set salary (or make a standard drawing) from your business account each month (this will help you determine how your personal income and the business income will be taxed)

4. Always consult with your accountant

Not sure exactly what you can claim as a business expense? Wondering which accounting software to use or how the tax law works?

Consult with us to put your mind at ease – ideally before you make a big financial decision or purchase and well before your tax return is due for lodgement. In addition to managing the nuts and bolts of tax preparation, regular meetings will help you continuously improve bookkeeping practices and better understand the financial workings of your small business.

These strategies will make your tax affairs simple and ultimately support the long-term financial health of your business.