Want to avoid paying more than you should at tax time, or a frantic last-minute search for missing records? New business owners have a lot on their plate and can easily lose track of a deadline or the data needed to lodge. Organisation is key – as is making the most of the tools available. Set yourself up with these four pillars of painless tax prep.
1. Commit to clean bookkeeping from day one
Year-round, effective bookkeeping is the best way to minimise tax-season stress. With the range of accounting software available, there’s no reason to rely on time-consuming manual methods that leave room for error. All-in-one options like Xero, QuickBooks and others automate your most important processes – tracking expenses, tracking sales and income, creating and sending invoices, and managing inventory. With records in one place and up to date, you’re better positioned to maximise your refund while avoiding penalties from incorrect or incomplete returns.
2. Capture every business expense
Many small business owners claim far less than they’re entitled to, largely because they lack a reliable system for documenting expenditure on the go. Without carefully logged receipts, you forfeit valuable deductions – cash you could be funnelling back into your business. Use a mobile app to record receipt data, track mileage and generate expense reports; many of these tools sync with your accounting software.
3. Separate business from personal
From day one, clearly divide personal and business expenses – it makes claiming deductions far easier and supports those claims in an audit. Create a separate bank account for the business and a dedicated card for business purchases; never combine expenses (if you buy printer ink for home and the business together, ask for two receipts); and pay yourself a set amount from the business account each month.
4. Always consult an accountant
Not sure what you can claim, which software to use, or how to interpret the rules? Consult an accountant well before the deadline. Beyond the nuts and bolts of tax prep, regular meetings help you continuously improve your bookkeeping and better understand the financial workings of your business – promoting positive relations with the tax office and the long-term financial health of your company.