Good Housekeeping with Your Tax Records is Essential
When you keep track of your tax records, you are effectively planning and thinking of ways to save on the amount of taxes you’ll pay for your business. When you really get down to it, there are only two ways to maintain a healthy cash flow in business: to either earn more money or spend less. As taxes are often viewed as the biggest single expense in your accounts book, it naturally makes sense to focus on spending more time updating your tax records.
Embrace Your Tax Records – Do Not Evade!
Legally, all business owners must retain tax records for a minimum of five years – which means that it is essential that you prepare sufficient workspace and a time schedule to manage your paperwork (which usually includes records such as income and sales, expense or purchase records, financial yearend records and bank records). The good news is that if tax records and its management sounds overwhelming, you can always delegate the task to your accountant.
The one thing all business owners should be aware of though is their responsibility to consciously keep track of all their business expenditure on daily basis. Denise Winston, founder of financial education company Money Start Here says that “It’s critical that entrepreneurs ensure that we take advantage of every tax situation. That means treating receipts like cash, not trash.” These expenses can then be easily kept for tax records either via an envelope or folder before you then transfer the receipts to your accounting files or software program.
For small businesses or entrepreneurs who are interested in learning more about maintaining their tax records on their own, you might be interested in accessing Your Small Business Tax Calender by the Australian Taxation Office which will help you plan and manage all tax obligations over 12 months.