Are you a tradie? If you are, then this 2 Minute Accountant video is just for you.
Say you’re in the car getting some petrol. Do you keep the receipt? Probably not, right? You don’t want to end up with your wallet and glove box full of all sorts of old receipts.
What if I were to tell you there’s an easier way to keep your receipts when you’re a tradie?
In today’s 2 Minute Accountant, I’m going to share with all you tradies out there a few must-know tradie tax tips to make your lives a lot easier.
1. Here’s an easier way to keep your receipts
The rule is pretty straightforward when it comes to receipts: if you don’t keep receipts, you cannot get a tax deduction.
So what can you do? There are a few great accounting packages you can try, like:
- Xero is an accounting software allowing you to take a picture of the receipt and throw it away
- Hubdoc is a useful document collection and management program that gives you the option of keeping all your financial documents, including your receipts, in one safe place. It can also get all your bank statements automatically.
- Receipt Bank is another great option for your accounting and bookkeeping software.
Remember, having your credit card and bank statements isn’t enough. You have to keep your receipts in order to be able to get a tax deduction.
2. The faster you give your invoice, the faster you’ll get paid
When do you usually get your invoices out to your clients?
Imagine this: you go to your job, you do it, you give your client the invoice, you get your smartphone or your credit card reader, you swipe it straight away.
Just like that, your invoice has been paid… it only took about 5 minutes.
How will your business improve if make some changes to your invoicing system?
Tip: The faster you get the invoice, the faster you’ll get paid.
3. Put your employees’ safety first!
Make sure you offer your employees all the safety and clothing equipment they’ll need to be safe out there, doing their jobs.
For example, I have a client who’s a roofer. As safety equipment, he needs a hat, sunnies, he might even need some earplugs and sunscreen. These are just some of the basics.
Tip: If you keep all your receipts, you can deduct your safety equipment and uniforms.
Here’s a trick though: if you’re a tradie, you must get your staff’s uniforms from an official Australian website in order to claim a deduction. In other words, it needs to be registered with the appropriate regulatory body so you can get a deduction for the equipment.
Bonus tip: You need insurance! I can’t emphasise this enough.
I have another client whose car got smashed. He’s a plumber. How can you get back to work when your car has been wrecked and you can’t just go get another one the next day?
So make sure you have adequate insurances and they’re all up to date.
4. Understand the difference between a contractor vs employee
Make sure you know how to collaborate with both a contractor and an employee.
Let’s say someone who’s worked with you gives you an invoice. Just because it has an ABN number on it doesn’t mean you don’t have to hold tax back.
Imagine if 6 months later you get a phone call from their accountant asking you where’s their client’s super?
You tell them, “I don’t have to pay super. He was a subcontractor, he gave me an invoice.”
Well, that’s incorrect. The fact that somebody gives you an invoice doesn’t automatically make them a subcontractor. It also doesn’t automatically mean you don’t have to pay their super or withhold their tax.
Tip: Don’t accept people at face value. Go and get the proper advice!
You might also be interested in: Tradies, Here Are Some Must-Know Tips For Your Accounting
5. Make sure your paperwork is up to date
Being a tradie, I’m sure you know how to reline a pipe, hook up a fan or fix a tap. But how’s your paperwork?
If you don’t keep your paperwork together, you can call on an external accountant to do it for you. I would encourage you to either try to do it yourself or make sure your accountant is a trustworthy expert.
Here are a few tips on choosing the right accountant for your business.
Are you up to date with the new legislation updates? Now, you can get your name on the Credit Reference Association bad payer’s list just because you’re not good at your paperwork.
Don’t risk it. It can affect your business, your family and your ability to borrow in the future.
Tip: Get good at paperwork or hire somebody who’s good at it to avoid any pitfalls in your business.
6. You need a job description and an employment contract for your employees
Both a job description and an employment contract will help you and your employee know exactly where you stand.
Having proper documentation of your business means taking the time to come up with a job description for each of your employees and employment contracts. Documentation helps your staff fully understand their work responsibilities.
I don’t care if you have 50 people or one person in your business. Every job needs a clear job description about what they do and how they do it.
Blurred lines get between employer and employee, friend and mate, so makes sure you’ve got it in writing. Get it documented.
Do any of these tradie tax tips ring true to you?
Out team at Shuriken is specially prepared to help out tradies. Come and find the perfect accountant for your business. We can help you make your business more profitable and more efficient. Let’s get in touch!