3rd May, 2024
Are you sorted for the end of the financial year (EOFY)? If you’re a tradie, it’s easy for cost tracking, invoicing and expense assignment to fall by the wayside as you focus on your customers.
With the 30th of June approaching, we talked to two MYOB experts about the best ways to get ahead of EOFY requirements.
Here’s what MYOB’s Leanne Berry and Jody Sitters had to say about tax for tradies.
Claiming deductions for business expenses is a way to minimise your tax bill at EOFY, which can make a real difference for small business owners. Knowing what you can and can’t claim is crucial.
Most tradies are aware of common deductible expenses like fuel, vehicles, tools, equipment, tablets, laptops and insurance, but some smaller expenses are less well-known. Jody gives the example of sunglasses and sunscreen.
“Tradies can claim for sunglasses – there are things like that they probably don’t think to put down as expenses,” she explains.
On the other hand, if you claim for a personal expense, you could get dinged and have to pay a fine. When you’re buying personal items and business expenses at the same time, it can get complicated.
One example: “You can’t claim the iced coffee you buy when you’re filling up on fuel. It’s easy enough to do but can sometimes make data processing harder if you’re buying personal items in the same transaction with fuel,” says Jody.
Sick of catching up with paperwork late at night as the clock ticks closer to the end of the financial year? Leanne says it’s pretty common for tradies.
“It impacts downtime, that family time. You come home and sit at the kitchen table at 10 o’clock doing your invoicing when you could have done it when the job was finished,” she explains.
She says automated invoicing and payments through MYOB are a way to save time and energy. And while it’s already close to EOFY for 2023-24, you can get a head-start on hitting ground running for the new financial year by making full use of automated invoicing.
“If you’re doing a lot of smaller jobs, you can invoice on the go using the online invoice app, so you’re getting paid. And activate online invoice payments so customers can pay you easily,” she says.
Jody explains that linking bank feeds to your accounting software is invaluable, giving your bookkeeper or accountant data to work from at tax time.
“If you start your bank feeds, then someone can do something for you – you can hire a bookkeeper or send that information to your accountant, and they can process it,” she says.
“It’s using the technology available to you to minimise the disruption to your work/life balance,” adds Leanne.
The key takeaway from both Leanne and Jody? Get support from an expert advisor well before the end of the financial year.
While there’s a perception that accountants or financial advisors are expensive, they know their way around tax rules and write-offs, so could save you thousands.
Jody explains that an expert eye on your expenses and income can mean the difference between a $10,000 tax bill and no tax bill – it’s all about what you claim and when.
“One day either side of the 30th of June makes a huge difference,” she says. “You can hold off invoicing a big client until the next tax year or go to Bunnings to spend up large on tools because you need some deductions. If you’re a sole trader, all that information can change your tax bracket, and your tax bill can change dramatically.”
These financial levers can have a significant impact – but you can’t use them if you don’t know the ins and outs of Australian tax law. That’s why expert financial advice is so crucial.
“My major tip is: you didn’t go into business to do the bookkeeping – so have a great bookkeeper,” says Leanne.
Our last tip may seem boring, but many tradies forget it.
As you spend money on your business throughout the year, it’s crucial to keep good records so you can claim the costs as deductions on your tax return.
If you don’t track as you go, you could end up hunting through the cab of your truck for receipts from Bunnings or the petrol station, then manually entering costs when you do your return. This is where clever accounting technology — like MYOB’s Capture App — comes in handy.
Leanne explains: “You take a photo of the receipt on your Capture app, and it goes straight into your software. Attach to the transaction on your bank feed, and everything is in one place. It makes it easy to maintain your record keeping for compliance and for your team of advisors to see the receipt and the source document without having to ask what the expense was for.”
Want to make the next tax time less stressful? Talk to the team at MYOB.
Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.
MYOB is not a registered entity pursuant to the Tax Agent Services Act 2009 (TASA) and therefore cannot provide taxation advice to clients. If you have a query concerning taxation including filing your BAS return or annual tax statements then you should consult with your accountant or other registered tax adviser.