Don't Leave Things To The Last Minute At Tax Time, 5 Things You Can Do Now

I don’t think I have ever met anyone who loves getting things ready for tax time. Even I don’t like getting my own things in order! I find getting a system in place and staying organised is the best way to tackle tax time. It also has the added bonus of being able to use the data you have to gather for tax to more effectively make decisions in your business, so it is a win win. Here are my tips for getting up to date and staying up to date:

1. Get your paper sorted

Having a receipt for all purchases is essential if you are to legitimately claim a deduction for a business expense. This means you have to keep hundreds, if not thousands of pieces of paper, each year, for a period of five years. I break into a sweat just thinking about it! The good news is you don’t have to and the better news is if you are a Xero subscriber it comes with a complimentary subscription to Hubdoc, which will take care of your paper management for FREE. All you need is a little discipline to take a picture or forward an email each time you receive an invoice or receipt.

2. Get your bookkeeping up to date

We are into the final quarter of the 2023 financial year, which means when it comes to tax time you will already be almost there. If doing bookkeeping is not your thing, seriously consider outsourcing. It will cost more to have your accountant fix your accounting data file than you will save by doing it yourself and getting it wrong. It will also free up your time to do more valuable projects in your business or give you back precious weekend time.

3. Project your income and expenses

With your data up to date you are in a position to use it for much more than tax compliance. This is where the magic can happen in a business. Take some time to project your income and expenses from now until June 30. You might even have a bit of a play with your numbers and have a couple of different scenarios. One scenario may be based on what you think might happen if everything follows the same pattern as the same time last year or in the past few months. Something a little more exciting is to put in some more aggressive sales targets and/or perhaps cost cutting measures to get a feel for what might be possible in your business. The whole point of this exercise is to dream, set goals and make a plan to make your dream possible.

4. Review your results and projections with your accountant

Consult your accountant to find out:

• If your projections make sense and any assumptions you have made are reasonable. They are also a sounding board for any changes to your business strategy as a result of going through this process.

• What your projected tax will be so that you don’t get any nasty surprises when it comes to tax time.

• How much and on what you should be spending to minimise your tax bill well in advance of the end of financial year so that you have time to implement their recommendations.

5. Track your progress and keep up to date

After getting crystal clear on where you are now and where you want to go you need to maintain the focus. There is a business saying “what gets measured gets done.” This means it is essential to keep your recordkeeping up to date (at least monthly) and to track your progress against your budget or projections. Xero allows you to input budget and projection data so that you can run reports to monitor your progress. Speak to your accountant if you need help to input data and read the results. It is something that is easily mastered with a little practice.

This process is guaranteed to transform your business and the way you think about tax time. Tax time will just happen and will be a by-product of the data you use to run your business in a purposeful, intentional and meaningful way.

If you would like specific advice tailored to your business and circumstances, Accounting Heart offers affordable service packages where you can work with Sonia one-on-one to help you get your business where you want it to be. Book your FREE Discovery Call to find out more.

Disclaimer: This is general information only and is not advice of any sort. No warranty or representation is provided by Accounting Heart Pty Ltd as to the accuracy, currency or completeness of the information contained in this blog. Readers of this blog should not act or refrain from acting in reliance upon any information contained herein and must always obtain appropriate taxation and / or other advice as may be appropriate having regard to their particular circumstances.