If you are a small business owner who hates the thought of tax time, it’s actually better to start preparing for it early.
Our Melbourne Bookkeeper service helps clients to face their tax accountant with all the details they need and a feeling of confidence, not dread!
Here is what you need to start doing now so you can make tax time a stress free experience in 2021.
Keep your bookkeeping up to date
Have all major accounts reconciled so you don’t have to spend hours at the busiest time of the year trying to figure out where payments have come from or find records of your business expenses.
You can do this yourself or get the help of a bookkeeper to stay on top of this task on your behalf. If you use a cloud-based accounting platform, most ingoing and outgoing payments can be reconciled with the click of a button.
Say goodbye to paper receipts
Handing over a shoebox of receipts is a waste of your bookkeeper’s time and your money.
Download an easy to use app like Receipt Bank or Hubdoc and make it a habit to keep an electronic record of receipts. These apps convert the information you upload into accounting data, which can then easily be exported into your accounting system and correctly reconciled by your bookkeeper.
Meet with your accountant in May
You have to feel for tax accountants… they have so many clients who only get in touch once a year, and then it is with an urgent request.
Set your starting blocks ahead of your accountant’s other clients and book your meeting for May. This way they can take a look at your (hopefully up to date) accounts and make recommendations which will help you spend strategically in the leadup to June 30th.
They are also more likely to make your job a priority as they know you are proactive when it comes to your money.
Make tax time a quarterly event
You need to file a BAS every quarter so you may as well take the opportunity to review other finance-related factors like stock and expenses.
Work with your bookkeeper to have everything up to date and tidy throughout the year and tax time will be a breeze.
If you didn’t do this last quarter, it’s not too late to start. Do a six-month review and it will give you a general idea of your cash status as well as how much you can expect your tax bill to be.
Review Aged Payables and Receivables
Your Aged Payables and Aged Receivables show how much you owe your suppliers and how much your clients owe you.
If you have outstanding debts, take care of them or at least get in touch with the people you owe to let them know how and when you plan to pay.
For the money that is owed to you, it may need to be written off as a bad debt in order to reduce your taxable income.
Again, being aware of what’s going on in the months leading up to tax time and taking the steps to rectify any issues will make your tax filing process so much easier.
Have finance contracts and asset purchase evidence ready
Big-ticket purchases and equipment/business finance loans can be tax-deductible in Australia.
Your Melbourne Bookkeeper will help you ensure you have the paperwork you need (including vehicle transfer documentation or loan contracts) to confirm your expenditure with your tax accountant.
Check your business and personal spending
Having a separate business account is a must to make life easier for yourself as well as your Melbourne bookkeeper but we all find ourselves pulling out the wrong credit card from time to time.
Ahead of tax time, check your business and personal accounts and provide records of any cross-purpose expenses to your bookkeeper. Ideally, there won’t be too many transactions, otherwise you are just creating a headache for yourself.
Get your statements ready for your Melbourne bookkeeper and your tax accountant
As a business owner, you need evidence to back up the income you claim to have earned or not earned during the financial year.
A good accountant will never assume what has gone through your cloud-based accounting platform is correct, even if you have the most reliable bookkeeper out there. Have your bank account, loan, Paypal and credit card statements ready to share and your tax accountant will thank you.
It’s up to you; either spend a small amount of time reviewing your finances on a monthly or quarterly basis when things are still fresh in your mind, or wait till the end of June and add several hours to your already full workload.
With the help of an experienced Melbourne bookkeeper who is focused on your long term success, you’ll breeze through to the new tax year without stress or time wasted.
Straight Forward Accounting offers Xero training for small business as well as full bookkeeping services. Book a free consultation to find out more today.