If you are a small business owner, you are probably already familiar with how difficult it can be to keep your books in order. One of the biggest issues any business will face is how to implement a system to keep paperwork where it belongs and with accurate information. It’s easy to become overloaded and end up with piles of forms and receipts that are just “put away” until you have the time to get them done.
How you handle all of this paperwork and keep it organised can have a huge difference on your business when the end of the year rolls around. Here are 7 helpful tips to make sure you keep your paperwork in order.
1. Use a single bank account for your business.
Mixing your personal bank account with your business bank account is a bad idea even though it might save you a little bit of money when you first start your business. What people may not realise is that any fees associated with your business account are considered legitimate expenses and can be used as deductions at the end of the year. The same principals apply to credit cards. Get a completely separate credit card for business use only. It doesn’t have to technically be a business card but just a different credit card that is only used for business purposes. This makes it much easier to keep track of your expenses as you won’t have to dig through your personal charges.
2. Never mix business and personal expenses.
This can be easy to do, especially if you are new to running your own business. A good example is if you take the company vehicle for an oil change. While you are paying, you grab a bag of chips and pay for them both at the same time. The business shouldn’t be paying for your chips and that won’t be a legitimate deduction at the end of the year. While this sounds small, if it ends up being a few hundred dollars of personal expenses at the end of the year, you could get yourself in trouble with the ATO.
3. Make sure you get a receipt.
This may sound like a no-brainer but many places won’t give you a receipt unless you ask. It’s easy to forget this if you are in a hurry so always double check.
4. Keep your receipts safe.
Stuffing them in your glove compartment or stuffed in your vehicle somewhere is not a good idea. Receipts will fade over time and may be difficult or impossible to read.
5. Use a log book for your vehicles.
This will keep track of how far you travel each year for business purposes. Make sure to read the odometer before and after your trips and keep an accurate log of it.
6. Keep all of your business records.
Get a file cabinet or a large flexible folder to keep all of your records in. Make sure you label each folder by month or year so you can easily access them if needed.
7. Save all records for at least five (5) years.
The ATO requires by law that businesses hang onto their records for five years after your tax returns have been finalised. It wouldn’t hurt to hold onto them a little longer just to be on the safe side.
