8 things You Can Do This July to Make Tax Management Simpler and More Effective Next Year
Did you have a last-minute rush to get your paperwork ready for tax time this year? Be prepared next time. Take a look at the suggestions below that may prove valuable in preparing for tax time in the future.
1. Use last year’s records as a template to ensure you do not miss out on items you might otherwise overlook. Review your financial records with your accountant to see how you can improve your position, and discuss the pros and cons of possibly restructuring to a company or trust.
2. Make sure that you are using software and bank accounts that can sync with your accountant’s systems in order to save time and money in collating data. The less time the accountant has to spend going through paperwork, the more time he or she can spend with you on planning.
3. Use online banking with properly recorded details in the payment reference section. Do you have transactions that are regularly repeated on each bank statement? Consider using a system like Banklink where you can code these recurrent transactions and they can automatically be posted to your system.
4. For cash purchases, make better use of your phone or tablet device and scan receipts daily. Upload the images to a free service like Dropbox or Google Drive where you can share access with your accountant or bookkeeper. The beauty of these services is that once shared, you and selected partners can access them from multiple locations. Try setting up folders for each month within the shared folder to keep receipts in chronological order.
5. Open up a High Interest Savings Account (HISA) for your business, and put away funds regularly to pay for GST and Super payments. There are two advantages to this idea: 1)You are putting funds away regularly, so you don’t have to find lump sums at short notice, and 2) You earn decent interest instead of leaving money in a cheque account. The accounts can be linked to your cheque account and funds transferred instantaneously if with the same bank, or overnight with a non-related bank. I like the ING Direct Business Optimiser and RaboDirect HISA for consistently decent rates.
6. Review your debtors, and prepare to write off the debts that are truly bad. Review your credit policy (who will you give credit to?) and your payment terms (7, 14, 30 days), and be prepared to stick to them or clients will take advantage.
7. Look at the long term needs of the business, and consider having your superannuation own your current or a new business property. This can be an extremely tax effective strategy for small business owners while freeing up the cash flow of the business.
8. If you have a business credit card on a rewards scheme, then think about paying your tax bills by credit card to earn rewards points.
If you have any other ideas then please comment as we can all benefit from other’s experiences