Tax time is fast approaching and it can be one of the most stressful times for business owners, especially if you’re not organised. There is a lot of administration and paperwork to deal with and it can feel overwhelming. If you’re looking to minimise the stress and maximise your returns, now is the time to start getting organised for tax time.
If you don’t know where to start, here are a few things I’d recommend you start with.
Hire the right accountant for your business
When it comes to your business’ finances, find an accountant who’s familiar with your business. This is especially relevant if you own a start-up or a digital business like an e-commerce store. An accountant familiar with your industry will know to ask questions relating to your line of work i.e. how much inventory you have in stock, whether you charge tax for overseas customers, subscription fees for your e-commerce solution i.e. Shopify.
Having an accountant ask the right questions can unravel tax saving opportunities you never knew existed.
Get organised with accounting software
If you’re still working with spreadsheets to track your expenses and sales, it’s time to make a change. An accounting software like Xero can be a game changer and automate some of the administrative tasks we all dread. You can sync all your incoming and outgoing costs with your accounting software, making it easy to track at tax time.
Move to the cloud
A lot of stress around tax time is due to the physical clutter of paper. If you’ve accumulated a heap of paper invoices and receipts, now is the time to move everything to the cloud. Scan the paperwork you need with your phone and store your documents in Google Drive or an alternative. Remember to place everything into folders i.e. FY21-22 and label your documents so they are easy to locate.
Adopt good habits
If you adopt good habits all year round, tax time doesn’t need to be stressful. If you have an accounting software in place, all you need to be diligent about is your expenses. It’s easy to have a business lunch and then forget about logging the receipt you’ve scrunched up in your back pocket. Having an app, like Expensify, can help log your expenses on the go. Once you’ve accumulated an expense, you can take a photo of the receipt, log the expense and throw away the physical receipt.
Tackle boring admin monthly
Set aside an hour every month to review the transactions in your accounting software. Doing so will give you a better understanding of your numbers but also spot any red alerts in your expenses vs revenue i.e. marketing costs vs incoming sales.
Tax time is one most businesses dread but if you stay organised throughout the year, you can minimise the stress and time spent doing your taxes.