Unlike Christmas, tax time comes several times a year for most businesses. But the biggest date is EOFY when you need to have everything in order and ready. Here are fifteen tips and tricks for a simpler and more efficient tax return process.
1. Keep all your receipts
Keeping your receipts in one place can be crucial. No matter if you keep them in a filling cabinet, a folder or even a shoebox, it’s more organised than having bits of paper strewn all over your house and office, stuffed into pockets or wallets, or dropped under the seat in the car. Find a system that works for you, and make a habit of keeping all receipts in one spot.
2. … then digitise them
You can get apps that will scan and convert your printed receipts to digital ones, such as CamScanner (iOS, Android, BlackBerry, Windows) or Shoeboxed (iOS, Android). They will even compile them in a spreadsheet for you. As soon as you’ve paid for something work related, get out your smartphone and photograph it.
3. Log everything
From car journeys to any public transport you use for work (not including your commute), as well as parking costs, keep records. It may just be tax deductible. If you use a travel card, the details of trips you’ve taken may be logged in your online account, so you can work out business vs personal usage.
4. Look after the cents
A receipt for a $4.20 train ticket may seem negligible, but over a year it adds up significantly. One $4 receipt per day totals over $1,000 per year: an amount you’d certainly want to claim.
5. Keep digital files
If you buy things online, keep an email folder to save transaction confirmation emails, so you have a record and receipt of your purchases.
6. Get statements in advance
Ensure that you have all relevant statements in advance, from Group certificates to bank interest statements.
Did you know that flight attendants can claim a tax deduction for moisturisers? Or that trapeze artists can claim on gym fees? Your business may seem more mundane, but you could still be sitting on a goldmine of deductions. If you have a home office, for example, you may be able to claim some of your internet and utility bills.
8. Calculate depreciation
Keep a list of all your existing hardware and other depreciable assets, and include the relevant percentage in your deductibles. Depreciation means it often makes financial sense to keep upgrading equipment, and having the latest technology can be great for productivity and staff motivation.
9. Bank online
If you use online banking, everything is at your fingertips, you can easily find records of deductible purchases, and you can print out statements for whatever time period you need.
10. Get accounting software
If you’re currently using Excel then you already know how to use software. Moving to a professional accounting software package will be child’s play. It will make things easier and quicker by automating tasks and reducing errors.
11. Set up bank feeds
You can connect your bank accounts directly with your accounting software. This means all the correct figures – whether a credit card expense, or a payment into your transaction account – get automatically entered into your books. All the information you need is always up-to-date, and you can pull up the figures for any specific period of time, depending when you report.
12. Move to the cloud
Cloud based accounting software is constantly updated behind the scenes, so it’s always current with the latest tax and compliance requirements.
13. Try e-tax
E-tax pre-fill is a service offered by the Australian Taxation Office (ATO) where they pre-fill your tax lodgement. All you need to do is review it and fill out the missing details.
14. ATO app
Individual taxpayers, small business owners and self-managed super fund trustees can access tax and super information in one place, and conduct their affairs on the go (for Windows, Apple and Android smartphones).
15. Hire an accountant
It’s always wise to hire a professional accountant to give things a final check-up. If you’ve already completed the first fourteen steps, the accountant will have very little to do, so it won’t cost you all that much.
As a bonus tip: don’t miss those deadlines! Penalties you may incur by not filing your tax return on time can be costly. After you’ve done all the right things to get your statements in order, don’t fall at the last hurdle. If you are using accounting software, it can send you reminders so you don’t forget when documents are due.
To read even more useful tips that can help your business on the way to success, download our free ebook ‘Keeping on top of compliance: Why your business accounts should be online’.