Another very common accounting mistakes people make is failing to keep their receipts, which can give your Melbourne accountant some serious headaches. Failing to keep your receipts can result to a series of cash flow, tax and accounting problems.
Take time to jog your memory. How many times have you gone over some bank transactions and don’t have a clue what was spent on a specific expense? Does it go to equipment, supplies or was it spent for a business meal? Or perhaps it’s a personal expense? You definitely can’t expect your Melbourne accountant to figure this out for you and you cannot claim tax deduction without any document to back up a claim.
Failing to keep the receipt of your transactions and purchases means incorrectly reported tax expenses and potentially higher tax bill especially if you are audited. Coordinate with your Melbourne accountant on how you can make sure regularly keep your receipts. A great option is to get software like ShoeBox to make it easier for you and your Melbourne accountant to save and retrieve copies of your receipts by saving digital copies on cloud.
Another great option is to make sure you keep your business and personal transactions separate. You can do this by opening a credit card account that is exclusively for your business transactions. It is highly recommended to use the credit card for all purchases so it is easier to keep track of the purchases and payments from the monthly bank statement.
Of course, you can always opt for the traditional way of storing your receipts – by compiling them in one folder or envelope.