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Bookkeeping
Unless you have an accounting/bookkeeping background or interest, one aspect of business that many small business people find hard to manage is their accounts. And June and July are obvious times for getting your accounts sorted – in Australia anyway!
A lot of the time it is simple – if you have systems set up and the time and energy to sit and concentrate on it. You simply record all the expenses you have (copying information from invoices and receipts) in one place and all your income in another place – whether the different places are separate sections of your system or just different columns.
Lots of elements go into business accounts – it’s nice when they all fit!
But what happens when those unusual situations arise? Personally, I ask my accountant how to record something – although now days my bookkeeper manages it and usually knows how to deal with details anyway. How do you deal with the trickier accounting tasks?
But I did come across Tilda Virtual’s advice on how to include barter arrangements in your accounts – and she made it easy to do.
Of course, some people would ask why would you bother – bartering is just between two people and doesn’t have to be entered into business accounts. However, if you have purchased materials, how do you account for their use in a bartering relationship? Many businesses find it is necessary to record barter transactions to keep everything in order.
More importantly, barter arrangements are still counted as part of your income as far as the Tax Office is concerned. So with Kylie’s accounting tip and this new knowledge, you can record any bartering you do in your accounts.
Preparing for 30 June…
It is now June and the end of financial year is rapidly approaching – are you ready for it?
Here are some of the things I am considering at the moment to maximise my position at 30 June. Is there anything else you do at this time of year?
- send out all pending invoices and statements as soon as possible – not only does it increase your cash flow this month, many other businesses will appreciate being able to pay (and claim a tax deduction) this financial year
- pay off all outstanding invoices if possible – you may as well claim deductions now rather than in 13 months time! And the new tax rates may mean deductions this year will help your tax position anyway
- consider making a contribution to your super fund – this is tax deductible for the self-employed now
- if you or your business supports a charity and you haven’t made a donation yet, now is a good time to do so as it can then count as a tax deduction this financial year – I wonder how much their donations go up in June each year!
- if you are eligible for a Government Co-contribution, your personal contributions of up to $1,000 must be made to your super fund by 30 June – and changes from the budget or an increased income next year may mean you aren’t eligible next year so get in while you can!
- consider making business purchases that will be needed soon. Not only can you claim it as a tax deduction, it may save you stress when you do actually need the item – printers notoriously run out of ink the day your proposal is due!
- get your accounts sorted and in order – the more organised they are, the quicker you (or your accountant/tax agent) can get the return completed and submitted
- collate related information, such as a travel log or noting the distances travelled, home office bills, private health insurance policy details, bank statements and PAYG statements
- if you run a service business, check the proportion of income from each client as tax rules can change if more than 80% of your income is from one source. There’s not a lot of time to adjust that, but if you’re on 81 or 82% a few quick projects may make a difference
- consider taking out health insurance if you are a higher income earner ($50,000 for a single or $100,00 for a couple/family) – the higher income brackets come into effect from 1 July 2008
- check if there are any expenses you can (and will benefit from) pay now rather than later in the year – for example, insurance premiums and interest on investment loans can be paid in advance to be claimed as a tax deduction now, and are sometimes cheaper paid as a lump sum. Obviously, this affects cash flow and other factors so is not always the best plan, but it never hurts to research your options!
By preparing now, you may decrease your tax liability and be ready to start the new financial year with a clean slate.
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