We get approached by sole traders at the end of the year, and asked “to sort out the mess”
Just because you may not have tax / BAS obligations until the end of the year, is no excuse for not having a bookkeeping system in place
That doesn’t mean you have to rush out and buy an accounting software program – it depends on the nature of your business as to what would suit you best in the first year of trading
sole traders forget that they are tax collectors working for the ATO
We find many sole traders forget that they are tax collectors working for the ATO [Assuming you are registered for GST]
Your accountant may remind you that approx 10% of your income is not, and never, was yours (ok- you may have some deductions to reduce that GST component)
Do You Know How Much Profit You’ll Make?
Our experience shows that most small businesses have no idea what their profit is until their books are done at the end of the year
Your accountant may suggest you set aside 20% of your income as you go – and get a bookkeeper to at least set up your bookkeeping system – and have it reviewed each quarter
If you need a bookkeeper, we can point you in that direction
We’re amazed how some small businesses survive without doing any bookkeeping, when they first bring us their paperwork
as long as they’ve got enough money in their hand at the end of the week
They think that as long as they’ve got enough money in their hand at the end of the week / month to buy groceries, pay the bills, home loan, etc – that they must be doing OK
Those people are generally the ones spending their GST / Tax money because they think that if it’s in their bank account – then it must be their money
When a sole trader is just starting, how do they know what their profit will be?
Since there may be start-up costs and initial outlay, it can be harder to estimate the profit in the first year
Speak to your accountant or tax agent because the comments made here should NOT be taken as specific taxation, financial, legal or investment advice.
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