Receipts and Expenses
RECEIPTS AND EXPENSES
Your options for collecting and storing the right evidence!
I see you… the overwhelm of getting everything ready for tax time is REAL.
Do you have all your invoices and receipts?
Bank statements?
… but are they all stuffed in a box under your bed? Or in the glove box of your car?
We need the data organised (spreadsheets and accounting software) AND we need the evidence documentation backing up those claims.
Record keeping is an essential part of tax filing.
There are ways to make sure that you can report all your income and claim for all the expenses without worrying about losing your files. It also makes it easier to pull out necessary documents without looking at a pile of papers.
Here are some online applications that can help you:
1. Google Drive
Log in online, or save the app to your phone. As long as you have a Google (gmail) account, this should be accessible to you. This allows you to save your documents online easily; just take a photo of your receipt right after receiving it, and save that to the drive folder. Since this is a cloud-based storage it allows you to access your documents wherever you are, just download the Google Drive app on your phone and you're good to go.
Using Google Drive will help you put your documents in one place without the worry of losing the physical copies. We recommend having a folder called TAX, and under it a sub-folder for each financial year. If the ATO ever audit you, you’ll know exactly where to find those documents.
Through Google Drive, you can also use Google Sheets (like Excel spreadsheets) where you can input the necessary information of your invoices and receipts. If you are a The Real Thiel client, no need to worry as we provide all our clients with templates which they can use to record their employment expenses, sole trader transactions, and even a stocktake template for your inventories.
2. Xero and Rounded
If manually typing data into a spreadsheet is taking too long or is too much executive functioning for you, then you might be ready for accounting software.
As your business grows it requires the use of softwares that will help the business run smoothly. From using spreadsheets, you can upgrade and automate your business record keeping through using accounting softwares. Two commonly used accounting softwares (and our favourites) are Xero and Rounded.
Xero and Rounded can help you save time in tracking your transactions and let you access real-time reports to see your business performance.
Here are some advantages of using these accounting softwares:
- Create and send invoices
- Connect your bank account to the software - your bank transactions will automatically flow to the accounting software which will allow you to reconcile your transactions to proper accounts like income, expenses, assets, and liabilities
- Upload the receipts/supporting files to the corresponding transactions in the software
- Easier process for tax returns - extract reports for tax return and BAS, and calculate estimated GST tax payable/refund
These are only the basic features of Xero and Rounded. Rounded has a more simplified system which is ideal for sole traders with minimal accounting needs. However, if your business is on a bigger scale, Xero offers a more complex software package that allows you to monitor inventory, manage fixed assets, integrate applications like Shopify, and run payroll reports..
If you’re ready to learn how to set up Xero properly from the get-go, we strongly advise you to get our Xero Set Up & Training Course. After 10+ years of doing Xero set-ups as a one-on-one service, Lauren has recognised the commonalities amongst her clients and has built a course that covers all the information you’ll need - and at a third of the cost of a one-on-one consult.
For more information and to figure out the right system for you, follow our guide here.
3. Add ons that read the receipts: Dext and HubDoc
Dealing with hundreds of receipts every month? Already using Xero and want to reconcile your transactions more efficiently? There are applications that you can sync in with Xero to lessen the manual data entry when reconciling transactions from the bank feed. This also helps to record cash transactions which are outside your bank account. Two applications that you may use are Dext and HubDoc.
Dext is a paid expense management solution that helps businesses automate transaction recording. Using the mobile app, you can take a photo of your business financial documents, like receipts and invoices, then the application will analyse the necessary information needed for the report that will be forwarded to Xero. This way it will lessen the manual data processing in reconciling your bank feed. It is not 100% automated but it does speed up the data entry job.
HubDoc, on the other hand, is already part of the Xero subscription. There are just a few steps to set it up. HubDoc reads the information like supplier names, amounts, and due dates from the uploaded photos or scanned copies of receipts, billing statements, and invoices then uses it to create transactions in Xero. The supporting document is uploaded in Xero together with the created transaction. HubDoc also serves as your digital filing system as it automatically sorts your documents into folders as soon as the files are uploaded in the system.
These are just a few ways to sort and organise your accounting documents. It will always depend on your business needs, either you go digital or keep on working with physical paperwork. There will always be a love and hate thing with tax preparation, but at the end of the day our goal is to have accurate data for tax reporting.
Happy record keeping!
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