The tax time clock is ticking and we’ve got you set with tips for tradies ahead of July.
Between P+L statements, declarations and reconciliations there’s a lot to stay on top of.
The team at job management software specialist Fergus has collated a couple of tax tips for tradies to help out.
You can sign up for a Fergus account before June 30 to nab 50 per cent off the first three months subscription.
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“With the right preparation and planning, you can make the most of the opportunities that the new tax year presents and get your trade business in shape for the new tax year,” Founder of Fergus Dan Pollard said.
Chase any outstanding invoices
One of the most important tasks you need to do is chase any outstanding invoices. This is essential for two reasons. If you issue the invoice before June 30, it will be counted towards your accounts receivable so that you can report it on your tax return – you may even be able to partially invoice WIP jobs.
Chasing overdue invoices can also help to improve your cashflow and ensure that you have enough money to cover your expenses.
Write off bad debts
If you’re not able to secure payment after chasing overdue invoices, you’ll need to write these off as debts. By doing this before June 30, you could be in for a tax deduction.
Keep in mind you might have to provide evidence to prove the client didn’t pay. This could be email correspondence or any legal action you may have taken.
Double-check what you can claim
Tradies have a range of expenses that can be deducted from their tax bill, such as tools, materials, and travel costs.
Double check what can and can’t be claimed for a business, it can change year on year. For example, this year you’ll be able to claim your software or digital investments as part of the Small Business Technology Investment Boost.
Don’t forget to provide receipts for each expense – ATO will decline your claim without them.
Carry out a stocktake and make any final purchases
It’s no longer mandatory to do a stocktake for tax purposes, due to the simplified trading stock rules, if your business has an aggregated turnover of less than $10 million/year.
But why not do one anyway? It helps you to understand what stock is old or slow to move, if there has been any theft, and it’s also a great time to review your pricing strategy.
Gather and organise your financial records
It’s essential to keep accurate financial records for your business. Not only will this help you to manage your cash flow and make informed business decisions, but it’ll also make it easier for you to complete your tax return.
ATO requires a profit and loss statement that summarises your income and expenses – if you already have a process in place to manage your accounts each month, this will be quick and easy to put together.
Finalise your payroll
Have a few apprentices or other employees on staff? You’ll need to review single touch payroll (STP) entries and ensure its up-to-date and then make finalisation declarations for each employee by July 14. Your team can’t process their own tax returns until you’ve done this.