Whether you are a freelancer, a small business owner or a trader: As a self-employed person, you cannot avoid the topics of bookkeeping and tax returns. In this article, we give you helpful accounting and tax tips so that you can get an overview of the jungle of administrative tasks that await you as a self-employed person.
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Accounting tips for the self-employed
Acquisition, advice, offers, sale of products or services – self-employed people have to do a lot themselves, which is spread over several shoulders in large companies. It’s not usually a nine-to-five job. Duties include bookkeeping and tax filing. There are certain mistakes that most newcomers can make and there are different ways in how should you avoid common small bookkeeping mistakes. With a few accounting and tax tips, you can ensure that you don’t have any nasty surprises in store for you at the end of the financial year.
Writing invoices is of particular importance. After all, no transfer is received without an invoice on the account. For the invoice to be accepted by the tax office, it must contain the following information:
- Your name, address, VAT ID or tax number
- Name and address of your customer
- Date of invoice
- the performance or delivery date
- payment term
- sequential invoice number
Earnings – Keeping records of the company’s income and expenses
For you to have an overview of the income and expenses of your company, a profit calculation must be drawn up as part of the bookkeeping.
If you have an expert tax accountant in Melbourne, Sydney, then you can of course delegate the calculation of profits to him. Anyone who wants to dare to determine the profit themselves will find a large number of software solutions on the Internet.
Collect receipts for the tax office
To be able to prove all income and expenditure to the tax office, the corresponding receipts and documents must be kept carefully. The systematic creation of a folder has proven to be very helpful for this:
- Create a folder with separator sheets and the categories Income and Expenditure.
- Divide your income and expenses into the categories bank (for transfers), cashbook (for cash payments) and open invoices.
- All documents are sorted in chronological order.
With this order, you always have an overview of your income, expenses and amounts still to be paid and do not have to search the entire house for missing documents before filing your tax return.
Of course, you don’t want to be an auditor, you want to run a business. Nevertheless, a few accounting basics are essential if you want to run your business properly and successfully. It’s as much about the profitability of your business as it is about avoiding mistakes that can cause a lot of trouble. Accounting in general: You must sort all your receipts, separate private and business expenses and submit the documents to your accountant in good time and in full. This is the only way to avoid nasty surprises during a tax audit. Not only do you face additional payments – you can also face high fines.
- Debit accounting: Instead of actual accounting, which only registers cash receipts, cash expenses, and account movements, you should choose debt accounting. All invoices are posted here, even if they have not yet been paid. This is the only way to see what result you achieved at the end of the month. Another advantage: With debit accounting, you can request the input tax amounts from invoices that have not yet been paid from the tax office.
- Personnel: Because they are the largest item in any business, you should subject the personnel costs to regular control. The most important value here is the turnover per employee. To do this, divide the total sales by the number of your employees. Clean management of personnel records is also important. In addition to payslips, this includes proof of notifications for social security and the work permit.
Make a note of important dates and dues
In addition to the upcoming deadlines, customer appointments, and other tasks, you should also note all-important accounting appointments in your digital or analog diary so you don’t miss any important appointments. Late payments often result in late payment penalties or fines. The most important dates include:
- Deadline for making the income tax prepayment
- Deadline for submitting the sales tax return
- Tax return filing date
- Due dates for all invoices
The self-employed can be divided into freelancers, small entrepreneurs, and tradespeople. Most self-employed people take care of simple bookkeeping tasks such as preparing invoices, clear accounting of income and expenses, and collecting and structuring receipts and receipts. For complicated matters such as preparing the tax return or the annual financial statements, it is advisable to hire a tax consultant. In this way, the self-employed avoid legal difficulties and can also save money.