If you’ve recently started a small business, and the Australian end of financial year has arrived sooner than expected, the task of organising your tax return and possibly a BAS can be daunting. Thankfully, the ATO’s modern system does a lot of work for you, and there are a lot more online resources available to help than there used to be.
But what’s even better is the chance to bring what you’ve learned into the next financial year. That could mean tracking new deductibles, better file management, or just knowing what exactly you need to keep on hand – and for how long.
In this guide, we’ll be exploring how business owners can start fresh in FY25, with our top tips on ultimate recordkeeping for tax purposes.
What Should I Be Keeping Records Of?
Even an online business racks up piles and piles of clutter, now in digital as well as physical space. Emails, receipts, returns and attachments quickly fill the nooks and crannies of your computer or office. So what’s essential? Well that depends on your business. Let’s break down the essentials.
- Cash flow – These are your receipts, invoices, payroll, and tax filings. Every business needs to keep a good track record of this as the most essential part of recordkeeping for tax purposes.
- Financial documents – Keeping hold of bank statements, credit card statements, and investment account details are your necessities for financial documentation records.
- Business operations – This can include contracts, inventory logs, orders, licence details and receipts, permits, and insurance certificates.
- Corporate & intellectual documents – The most common example is any trademarks your business holds, such as company names and logos. Besides this, corporate and intellectual documents cover contractual agreements, and AGM minutes (if you’re holding those).
How Should I Keep These Documents?
There are certainly a lot of programs and folders you can keep these bits and pieces in. To break it down, here are the 3 main options:
- Software – keep them in your computer
- Cloud – keep them on someone else’s server
- Paper – keep them in your cabinet
The benefits of using specifically designed software or cloud solutions such as QuickBooks means you can have your documents backed up elsewhere for easy access and peace of mind. That means that if your primary device was stolen or damaged, you’d still be able to retrieve your records through a password-protected cloud.
And of course, you can put them away as physical copies in your garage as a back-up too – just don’t forget that you need to keep them all for 5 years after their tax return year before you can toss them.
Should I Let The Pros Handle This?
If your business is booming and there are receipts and papers flying everywhere, it’s far easier to have an accountant collect the details and run the numbers than to wrestle with them yourself.
That said, accounting programs have simplified a lot of these calculations, so you can certainly handle a small business’s tax return yourself. What you might like to do is simply hire an accountant to audit your recordkeeping and reporting practices – this way you’ll be able to save by doing the brunt of the work yourself while also getting the facts early on.
Another alternative is to hire a tax agent – a specialised accountant who works with you primarily around the end of financial year period in Australia to streamline the tax return process and guarantee you’re filing your reports with accuracy.
Should I Register For GST?
If you’re making a healthy $75k+ through your business, you’ve hit the big leagues, but this number and above means you also have to start paying Goods & Services Tax (GST). So, if you haven’t already, go to the ATO site and register for GST.
You can also do this if you’re making under $75k, which can net you some juicy returns, though this depends on how many GST credits you have. Once you’re registered for GST, your tax return becomes a little more complex because you have to start submitting a BAS too, so consider whether it best suits your needs and goals at this stage.
What’s A BAS?
A Business Activity Statement (BAS) is very similar to a tax return, but its job is to report your business’s GST payments. Almost every time you sell something or perform a service, you incur the 10% Australian tax, which goes on the BAS.
Additionally, other payments like PAYG are included in the BAS, so consult with a tax professional if you’re filling out your first one to make sure you do it right.
Home Office Deductions
Just because you’re working from home, doesn’t mean you’re not entitled to tax refunds on business-related items. In fact, everything from your comfy office chair to your air-conditioning can be claimable.
For each hour worked in your home office, you can claim a fixed rate of 67 cents – just be sure to have evidence of these hours. Everything you’ve bought to use for your home office is tax deductible too.
What Other Benefits Do I Get As A Small Business?
To support small businesses, the ATO allows a handful of benefits and deductions. This includes energy incentives, simplified depreciation rules, immediate deductions, and low tax rates. For the full list and details of all these incentives, check the Australian Tax Office website.
Feeling In Control For FY25
Whether you made out from the EOFY like a thief in the night or were totally flummoxed by the whole process, you’re another year wiser, and another year closer to becoming a tax recordkeeping guru.
Now you’ve read this article, you know what methods work, what you should be collecting, and where you can keep it all. So start taking photos of those errant receipts, make new folders on your computer and label them properly, and remember what you can claim deductions on.
And if you need additional support, then don’t hesitate to reach out to your trusted business accountant or other financial specialists. The ATO website is also packed with resources for small business owners, or you can even secure support from fellow mumpreneurs in our Mums of the Shire Facebook group. We’re all navigating tax time together, and chances are some fellow business owners in our community will have their own recordkeeping tips and tricks to share.
