Ask any tradie what they like least about running their business and more often than not, the answer will be paperwork. There is no bigger drainer than having to sit at the kitchen table completing admin tasks after a long day at work. Aside from doing your BAS there are all the other painful jobs such as issuing and chasing invoices, reconciling bank statements and crunching the numbers.
As your business grows you might decide to outsource some or all of these tasks to a bookkeeper. Given that a typical bookkeeper will charge a lower hourly rate than the average tradesman, it makes very good business sense to outsource your books and BAS, allowing you the time to focus on getting the job done.
We have come up with a few tips and tricks to help new (and seasoned) tradies to manage the day to day running of their business. And if you are ready to take the next step and utilise the services of a Bookkeeper, Laguna Bay Bookkeeping are here to help!
Receipts and Record KeepingKeeping receipts can be annoying and it’s easy for them to get damaged or lost - or worse they fade! But when you think about each one as a tax deduction (Potentially Money Back), they take on a whole new meaning. Its good practice to therefore take a photo of each one so you can save it electronically. The ATO accepts digitally saved copies of receipts that can be clearly read. You can keep all electronic photo versions of your receipts within your accounting software. Xero even allows you to email your Xero file directly from your phone with the photo attached.
With the actual copies, keep a plastic folder in your ute or van, write “Receipts” on it and put each receipt in there for safekeeping.
Personal And Business Never Mix!One of the first things you should do when starting a business (if you have started its not too late!) is open a separate bank account, solely for business purposes. Use this account for business spending only and ensure all customer payments go into this account. Mixing business and personal spending can turn into a headache very quickly.
Many Banks offer no fee business accounts - contact a few and shop around to find the best account that suits you.
Vehicle and Equipment ExpensesAs a tradie your business vehicle is probably your daily transport, storeroom, office, lunch room etc etc. You are going to cover a lot of kilometres in a year so it’s important to get the matching tax deductions available. There are two different methods of claiming your vehicle expenses – the ATO website explains them clearly - See lInk here - its good practice to start record keeping as soon as you can.
You will no doubt have invested a lot of money in tools and equipment that are used in the running of your business. Keep the details of all of these purchases. This can be done in a basic spreadsheet or Word document. Include the price, the brand, serial numbers and where and when you bought them. This will help with end of year depreciation (something your Tax Accountant can do for you - more tax breaks!) and is also helpful for insurance purposes.
Accounting Software & Record KeepingGet a record-keeping system in place ASAP. This can be an Excel spreadsheet or in your chosen accounting software – the important thing is to get a system early on. We recommend using accounting software from the beginning and a good bookkeeper can help you choose a package that suits your budget and needs. Most Accounting Software Providers offer a free trial, so that you can make sure it does everything you need it to. Laguna Bay Bookkeeping are experienced across a variety of software platforms including MYOB, Xero and Quickbooks.
Keeping on top of Client PaymentsOne of the biggest challenges faced by those in the trades industry is ensuring they are being paid when they should be. A few tips to help ensure this is happening are;
See more about dealing with debts here.
Tax & GST
Its so important to provision for End of Year Tax. Laguna Bay Bookkeeping suggest to all of our clients to open a separate Savings bank account and transfer a percentage of income aside each month or quarter to provision for any tax payable at the end of the year. Its important to provision and remove the stress of having to suddenly try to come up with a large amount of money should there be an amount payable.
At the time of writing this, the GST threshold is $75,000. If you earn $75,000 or more in a financial year, you will need to register for GST. Keep your eye on your turnover throughout the year to see if it’s edging towards the 75k threshold – at which point you’ll need to register. InsuranceMake sure you have the right insurances in place - Income Protection, Public Liability Insurance and Equipment Cover to name a few.
Laguna Bay Bookkeeping are highly experienced and motivated to help see your business grow. Offering complete end to end bookkeeping services, we pride ourselves on offering the complete account keeping solution, all at an affordable hourly bookkeeping rate.