One of the most neglected aspects in all businesses, but especially the trade services industry, is the ability to manage records for the ATO.
As time consuming as it may seem, when you have a great system in place to assist with this side of business, it can be a quick and easy process.
Whether your business is a start-up, or you have been in operation for many years, good record-keeping is underrated and invaluable. Habits are difficult to break, so putting value on record-keeping is a must from the word go.
Google can be useful, however, it can also be overwhelming with information overload and no clear pathway. Below is a simplified version of a few 'how-tos' when it comes to record-keeping and why your trade service business can succeed from this practice.
Keep it old school:
- If you prefer paper, then make sure you organise that paper. Have a separate file for each financial year to incorporate all your business income and expenditure in one spot.
- Excel is another old-school method and can be used to record all types of business transactions. Remember to accompany this with a comprehensive file of receipts.
- Hire a bookkeeper to sort it out for you.
Let’s talk digital:
The way trades are evolving means there is the ability to have an online presence. No paper, no file, all in one spot… ‘the cloud’.
- You wouldn’t buy a faulty drill or hammer, so invest in quality cloud accounting software. This software can do all sorts for your business, from creating invoices, job cards, document management, payroll, and much more.
- The current market leader is Xero. When you become even more confident with digital accounting, ‘add-ons’ to Xero such as HubDocs or Dext will make record keeping even easier. Just one example of how powerful these apps are is that you can simply take a photo of your receipt and upload it straight into the cloud.
Why do it?
There are a number of benefits to record-keeping if you can commit to the process.
- Create efficiencies within your business, especially if you are in the cloud
- Helps maximise the expenses you claim and reduces your tax obligations
- Everything is ready to go for your accountant at year-end – therefore saving you time and money
- If the ATO requests an audit, it is easy to comply
- If data is live, creating live reports ‘on tap’ is a breeze
- Helps identify the strengths and weaknesses in your business
Where to now?
If you haven’t already got a system in place for your business on how to manage your records, then speak with an accounting specialist within the trade services industry to get you started.
Doing this right from the get-go will only help your business grow and become more efficient.
At the end of the day, the ATO put the onus on you. Record keeping will help you meet your tax obligations, track your sales, and improve your business. So, while it may not be the most entertaining part of your job, keeping accurate records will make your life easier allowing you to relax, and chill come tax time because all your figures are up-to-date with receipts.
One of the habits of a great tradesman is their ability to manage their finances. After all, how do you track success without managing finance?
For more information
Please contact your local RSM office if your trade service business needs financial advice.