Did you start working as a Tradie to get out of doing any sort of paperwork? After all, it’s enough to set your teeth on edge – and – it’s not really your speciality if you were totally honest.
You’ve found that despite your best attempts, your business paperwork is in a disorganised jumble in the middle console of your ute (or maybe the glove box.). You have to pay your suppliers, get those invoices out from a week ago and pay your workers. Let’s not even think about lodging your BAS or getting tax ready. It’s enough to make you feel like chucking in the tools.
There’s no need to do that. It’s only a matter of being organised and reaching out for the right sort of help. It doesn’t have to be a stressful task. Here are some easy steps when it comes to the word of bookkeeping for Tradies.
There are some key factors to the construction industry that set’s it aside from most careers and other businesses. Your work is project-driven. You run your business around different projects and occur on different sites and locations. They involve different labourers, equipment, transport costs, tools and you’re accounts will represent that. Different projects will have different supplies and billings.
Your projects may not run succinctly. There are a myriad of reasons billing may be delayed, from the length of projects, things going wrong, staffing issues and materials. The scope of your project may change without notice. You’ll deal with changes to designs, site conditions, supply issues, orders. Things don’t run smoothly. Your costs need to be accurately tagged to each project.
Outsourcing your bookkeeping is a logical option, however it’s not a set and forget activity. You’ll still need to keep tabs on your business so that you can see if you’re running profitably. To stay involved in the process, you need to find a bookkeeper you can contact regularly and have discussions with about your bookwork. You need to find someone who will understand issues, highlight possible warning signs and then communicate with you so you have time to do something about it.
Being across your bookkeeping gives you a great perspective on your business operations. A bookkeeper is not just an annoying expense! They are a vital link that ensures the success of your business.
Managing your bookkeeping in an environment where you can have access to past and outgoing jobs is vital. When it comes to keeping business records, the Australian Taxation Office (ATO) can request to see your books for up to five years from your date of lodgement! In case of audit, it pays to make sure you’re books are kept in order.
The ATO also allow digital copies of your receipts and invoices as long as they are a true and clear copy of the original. Digital files don’t downgrade or degenerate. Don’t forget to have a backup copy of your books in case of corruption and keep your passwords up to date and safe.
Using the right accounting software will provide a central hub that both you and your bookkeeper can access and manage. A good software package will help you manage payroll, BAS, GST, invoices, expenses and not only keep copies of your receipts but also categorise them into expenses when it comes time to claim tax deductions.
Your tax accountant will need to know these categories so they can depreciate tools and equipment, claim your expenses correctly and maximise your tax refund. There may even be concessions and tax offsets your business will qualify for if you can provide the right financial information.
There are several tax deductions that can be claimed that are industry specific. Tax time is a great way to claim back some of your business expenses that you’ve incurred throughout the year. The more organised you are, the more you’ll be able to claim back.
The most common tax deductions for Tradies are:
- Work vehicle expenses – don’t forget to keep your log book in date
- Travel expenses – meals, accommodation, flights and road tolls and parking
- Home office expenses – occupancy and running costs, phone, internet, electricity and heating and cooling.
- Work clothing – items such as high vis jackets, protective footware and safety clothing
- Training – updates on skills and licenses
- Tools and equipment – you may be eligible to claim the instant asset write off or depreciate your capital costs.
For a detailed list of common claims, click here
Pro Tax Tip: To be able to claim a tax deduction, you must have already incurred the expense and your expense must be business-related. You cannot claim anything of a private nature.
Consistency Is Key
On average, it takes anywhere from 18 to 254 days for a person to form a new habit, and an average of 66 days for a new behaviour to become automatic. It’ll take time to learn to be consistent with your business records, but once a habit is formed, it becomes second nature. Start out the way you intend to finish up – successfully.
Remember, you won’t have to go it alone. Just like your customers expect a good, consistent job from your work, you can expect the same from your bookkeeper. Don’t think of them as a separate entity – they’re on your side.
ITP The Income Tax Professionals tailor our bookkeeping services for your needs. One day or five days a week, we suit you. Our accountants can also back your business if you need to change business structures or just to hear advice. Our Tax Agents will ensure you’re covered at tax time and maximise your tax refund. Your money, your pocket. Phone 1800 367 487 or book online today.