How to prepare for tax time
It’s nearly tax time! For 84% off taxpayers who will receive a refund, this is a joyous time of the year. But it’s important and beneficial to you and your tax agent if you prepare all appropriate documents prior to getting your tax return done.
Here are our five top tips to help you prepare for tax time!
1. Get organised with the basics!
The more organised you are the better your chances are to maximise deductions. Without relevant and accurate records and receipts, you will not be able to capitalise on your expenses. Although every tax return is different there are some basics that are standard for all business structures:
• Copy of last year’s financials and tax return
• Records of sales and purchases of any shares, business or property
• List of all income, including payment summaries, business income, rental income, interest and dividends and any foreign income
• List of all expenses, including business related expenses work-related expenses, donations, self-education expenses and the cost of managing tax affairs
• Plus a few extras for individuals:
o Private health insurance details
o Spouse details (if applicable)
o Children’s details including date of birth (if applicable)
2. Ensure all end of financial year docs are lodged on time!
It is extremely important to ensure all your end of financial year reports are lodged in a timely manner. This includes but are not limited to:
• TPAR or Taxable Payments Annual Report
• Return to Work SA Reconciliation
• STP Finalisation
3. Review your business structure and plan
As your business grows and expands, you may decide to change your business structure, or to restructure your business. For example, if you hire employees, take on an investment or own assets, a company structure can protect your personal liability.
A few common reasons to change your structure include:
• Change in ownership – If you buy an existing business, you may decide to change the structure to meet your goals for the business.
• Financial reasons – You may restructure to meet financial goals and objectives, such as improving cash flow or profitability of the business.
• Operational reasons – You may reorganise your internal functions, such as sales and marketing, to improve the way your business operates.
• Business growth – Your business may now operate in overseas markets, have expanded or changed its product functions requiring you to change your structure to accommodate this growth.
As well as this, there are numerous tax benefits that can be achieved by adopting a new business structure.
Also, now is a great time to set yourself up for the year ahead. Regularly reviewing and updating your structure and plans will help you to:
• remember your goals and priorities
• assess whether your strategies are working
• adapt to any changes in your environment
• make the most of new opportunities as they come your way
• prioritise and maximise your effort (work smarter, not harder)
4. Get techy
Cloud technology allows you access your data at any time, from anywhere.
From invoicing on the run to helping keep your Single Touch Payroll (STP) compliant, Xero accounting software has all the features you need to manage tax time effortlessly. It helps to keep all of your finances organised and gives you a full financial picture of your business.
o Keep on top of your cash flow by sending online invoices with online payment options
o Work smarter with intuitive invoicing software – send invoices from your phone or desktop, as soon as the job is done
o Customise your invoices, accept payments instantly, set automatic reminders, send invoices from your phone or desktop in minutes.
o Spend less time on data entry
o Connect to your bank so transactions can flow through automatically into Xero each day
o Know how your cash flow looks and keep track of money going out and coming in.
EOFY payroll finalisation is traditionally a time packed with administrative tasks such as creating payment summaries for your employers and each worker. STP through Xero eliminates many of these year-end chores – bookkeepers/accountants just need to submit a finalisation declaration on behalf of the employer. It’s as easy as ticking a few boxes in Xero Payroll.
Collaborating with your Advisor
o Xero lets you work with your accountant/bookkeeper in real time
o It allows you and your advisor to discuss business data while viewing the same information at once
o By having access to your live data, your advisor can work more efficiently and effectively on your tax return.
Customise Xero to suit your business
With 800 different add-on apps you can automate everyday tasks. You got into business to do what you love, not to get stuck into the books/finance, chase invoices, sort payroll or file tax returns, but with Xero your numbers are taken care of so you can focus on other important things. With everything in once place, running your business has never been easier.
Another great on-the-go app that makes business finances easier.
o No need to keep copies of your old receipts and invoices – just take a quick picture and your purchases will be securely stored in Dext and available for your bookkeeper/accountant to view
o Its integration with Xero allows your bookkeeping/accountant to push through all receipts/invoices with one click, making reconciling of your accounts more efficient
o Provides real-time data
o Makes tax time simpler – now there is no need to provide copies of invoices to your accountant.
5. Seek help from experts
Get the most out of your tax return by working with highly skilled accountants. What may seem irrelevant to you may have a tangible impact on your tax return. You may think doing your own tax return will save you money however, it also has the potential of missed unclaimed tax deductions.
The deadline to lodge tax returns is the 31 October 2021 for self-lodgers and 15 May 2022 for those who choose to use a tax agent to submit their return on their behalf.
However, to qualify for the 15 May 2022 extended deadline you will need to register with a tax agent and have them lodge any outstanding tax returns (from prior years) before 31 October 2021.