Many of us may make New Year resolutions for ourselves as we welcome in the next calendar year, but what about some resolutions for your business for the next financial year? Here are few areas you may consider making changes:
Keep better records
The Australian Taxation Office (ATO) requires you to keep most records for 5 years. But the records do not need to be a paper copies. Paper receipts also fade.
One alternative option to keeping paper receipts is to use data capture software such as Hubdoc or Dext. Download the app on your phone, take pictures of your receipts and then upload them to be stored in the cloud-based software. Hubdoc and Dext can also be integrated into accounting software such as Xero to allow for more streamlined coding of transactions.
Another option is to simply scan your receipts regularly and save them onto a USB or hard-drive. It is recommended you also keep a back-up of the original files.
Upgrade your accounting software
If you are still using excel spreadsheets to record your income and expenses, or manually entering your bank statements each month into your accounting program and struggling to reconcile the accounts, it may be time for a change.
Utilising cloud-based software such as Xero could save you hours of data entry time that could be better spent working in your business. Your bank account is linked to the software so all transactions are downloaded rather than manually entered. All you have to do is code the transactions, which will take less and less time each month after you set up memorisations for regular transactions.
Using cloud-based software will also allow your accountant to assist you whenever you are having issues, as they can log-in at the same time as you while on the phone to you.
If you keep up to date with your coding, or utilise a bookkeeping service to do so, you will be able to track how your business is travelling at any point in the year which will aid in decision making.
Keep a log book, keep a diary
For each vehicle you or your employees use in your business, it is recommended you keep a logbook.
You need to keep a logbook for a minimum of 12 continuous weeks and it is then valid for 5 years, unless your usage changes drastically in which case you would need to start a new logbook.
If you have employees using your vehicles, you also need to record the odometer readings each year at 1 April and 31 March for fringe benefits calculation purposes.
When it comes to phone, internet and electricity usage at home, if you are a sole trader, keep a diary to calculate your business-related percentage of use. The ATO recommends to keep a diary for a four week period to work out the percentage to claim over the 12 months of use. Record the number of hours you are working from home, time spent using phone and internet for the business versus time spent for private use.
Get organised, keep track, budget
Have you ever been surprised by a tax bill or a deadline? Get to know what is due and when and start planning. Have regular meetings with your accountant so that they can help you monitor how your business is going, offer suggestions to improve your cashflow, and advise how much to put aside for tax, GST, PAYGW and superannuation guarantee.
Most importantly, there is no such thing as a stupid question – don’t be afraid to ask for help!
Want to discover important financial key dates to save in your calendar? Click here.