With June 30 on the horizon, many business owners and sole traders are preparing their books for tax time. While it’s prime time to gather receipts, review deductions and chase bad debts, it’s also the perfect opportunity to reflect on the past year. Here are 5 things every sole trader should do before the end of the financial year.
1. Double check your paperwork
If you’re new to being a sole trader, you’ll need to make sure you have all your paperwork in order before June 30 rolls around. As a sole trader, you’re an individual running a business, so the Australian Taxation Office (ATO) allows you to submit an individual tax return that includes your business and it’s income and expenses. You will need an ABN, so apply for one now if you haven’t already. If your annual GST turnover is greater than $75,000, you will also need to register for GST.
2. Review your tax deductions
Take a moment to review your tax deductions for the year. You’ll want to make sure you have receipts or proof of purchase for all your deductions. There’s still time to bring forward any potential tax deductions from July onwards, back into this financial year if you want to maximise your deductions and potentially reduce your tax bill. If you’re a sole trader and your home is a place of business, you may also be able to claim tax deductions for a portion of owning and maintaining this space.
3. Prepare for your tax return
Submit a quick tax return this year by getting prepared early. As a sole trader, your tax return doesn’t have to be complicated or time-consuming. If you’ve kept a handle on your paperwork throughout the year, understand your tax deductions and have all your receipts, you may find it quite easy to submit your tax. One of the best ways you can prepare for tax time is by moving to cloud accounting software, so you can easily monitor your expenses and any outstanding invoices at the click of a button.
4. Reflect and observe
Just as a new year is the perfect time to make resolutions, so a new financial year is the perfect time to reflect and observe. Take a moment away from the day-to-day running of your business and reflect on the year. Where did you end up? Did you meet or exceed your goals? Where did you fall short? What would you like to do differently next year? Write down your observations and figure out where you can improve so your business can continue to grow moving forward.
5. Hire a professional
Before the calendar flips over to July 1, take the time to make changes to your business plan. After you review the year that’s past, it’s time to put your good intentions into action. Hire an accountant and take advantage of their business knowledge and work with them to propel your business forward. A great accountant can help you improve your cash flow, settle any bad debts and prepare for the future. They can also conduct a business audit and provide general financial advice.