When the deadline approaches, taxpayers start preparing their documents to calculate income and deductions. You might not be the one who waits for the last minute to rush but many individuals do this. Since ATO approves only those deductions and claims that are supported by receipts and records, it is essential to save and maintain them. Let’s learn more about keeping records for maximizing deductions and reducing your tax liabilities.
Written Records to Claim Deductions
For claims amounting to more than $300, written evidence is essential. However, instead of submitting proof for just $300, you need to provide details of the complete amount being claimed. This excludes expenses for meals, travel, and transportation as those can have special records and evidence.
These records testify to your expenses and show how you calculated the amount of deduction you are claiming. All your written evidence must contain the date of transaction, amount, item, and supplier’s name. And for claims under $300, you can provide self-documented evidence along with supporting information.
How to Keep Records?
Starting from the time of the transaction, you should maintain the records for up to five years. And in case of a dispute, keep the records until the resolution. If you are claiming a deduction for depreciated assets, you need to maintain records throughout the period of the claim plus extra five years. However, if you have certain transactions that you will be claiming later, you need to keep the records safe until the same is settled.
You can either maintain manual or electronic records with the latter gaining prominence nowadays. Or you can hire a Toongabbie accountant to do the job for you, minimizing delays and errors.
Accounting errors can occur anytime especially during overtime works. More notable issues and confusion can happen if the errors are not discovered and rectified at the right time. Some common errors indulge tossing receipts, omitting transactions, not reconciling books, transposition errors, and reversing entries. Below are some tips to find common errors.
- Audit Trail: Audit trail is a great method to track accounting transactions and rectify errors. It comprises a set of documents that are used to verify the accounts in your books. Thus, with a check on recorded transactions of entries on expenses, sales, and purchases, you can reduce errors and hence, the consequences.
- Be Consistent with Your Work: It does not matter how you review books and record transactions. What matters is that you should follow a consistent procedure. By maintaining a daily routine, you can rest assured of reducing careless errors. In case, you don’t have one, then generate an accounting procedure as soon as possible.
- Double-check the Work: To find any errors, you should take some time to double-check the work. When you put information in the books, ensure that your receipts or documents match your recorded data. This way you can find and correct mistakes made during information input:
- Entering wrong numbers
- Transposition or flip flop numbers
- Forgetting or overlooking to record data
- Adding the data in the wrong account
- Conduct Reconciliations: You should conduct reconciliations regularly. While reconciling the account, you can verify the data in account with other financial record data such as matching bank statements with balance sheets. You can also compare the accounts with business receipts, credit card statements, and other financial records.
Doing all this yourself could create another mess. That’s why you should look for an experienced accountant from Wetherill Park.