Most business owners tell me they want to save on taxes. And sometimes considering the amount of taxes they pay, I do not blame them.
And although we do as much as we can, we always say a bit of diligence on your part plays a part too. According to recent research, it could play a bigger part.
You see a new report conducted by Aussie fintech company Slyp and big four bank NAB surveyed over 300 businesses to identify the impact receipts have on SMEs come tax time.
It suggests 25% of those surveyed have lost up to $10,000 by simply misplacing receipts.
Crikey that is a lot.
But it gets worse because a further 8% of those said they’ve lost between $10,000 and $100,000. Crap. That really is a lot. And remember this is the happening year in year out.
It does not end there either because:
- A whopping 62% said they lose paper receipts at tax time,
- 42% of those that do collate them said it’s the most time-consuming part of the tax process.
Now many business owners we speak to tell us that they have a fantastic accountant or bookkeeper who never pesters them for receipts, so they do not need to worry about them.
And that is when we know there is bomb about to explode. It may take two weeks to 10 years but if when it explodes, all hell breaks loose.
Because to claim expenses and, more importantly GST you must hold a valid receipt. If your accountant or bookkeeper is not asking you for receipts then they are assuming you are keeping them in a file somewhere. Are you week in week outputting your receipts away?
If you are you will be fine. But most don’t.
If in two years time the ATO comes along and asks for receipts, will you be able to provide 95% of them? If not, the chances are they can expect big tax bill because expenses & GST have been disallowed.
Most business owners hate collecting paper receipts and getting them to their accountants.
And I get it. I hate keeping them too.
We find that digital invoices are not only time saving for you but also adds efficiency to us who may prepare your bookkeeping or financial accounts.
We have found that many of our clients who use our systems rarely lose receipts which means we claim most, if not all, all claims knowing if the ATO comes knocking on the door we will be fine.
So, if you do not want to lose out on your tax claims and want to save time as well what should you do?
- Speak to your accountant. Take their advice but if they say stick with paper receipts in a folder you may need to think if they are technically up to date.
- Take photos using your phone of all receipts and sent them to platforms such as Receiptbank or Hubdoc so that they are instantly available to your bookkeeper.
- Find out what technology exists that will make your life easier. Xero and QBO can reduce significant time so use them and the addons that are available.
- When you make your business efficient don’t ask your accountant to reduce fees. Ask them instead how they can help you in business advice so your business grows and generates more income.