Hey Hustlers, It’s Tax Season – Here’s How to Deal
July, winter has set in and the end of June marks the half way point of the calendar year. In the Taxation world, July exists for one reason and one reason only – so “The Man” can take all of your hard earned money in the form of taxes. A little dramatic? Ok, but hey, we’re stressed…
Understanding Income
As if paying taxes wasn’t already confusing enough, why not add in different types of income to the mix. Full time salaried employees pay taxes differently to that of freelance or contract work. It can get a little confusing. And then there’s GST. Before you start your taxes this year its good to know what income you have and what type it is so you know exactly what you are getting yourself into.
Tracking Money
When you work as a contractor, you won’t get a Group Certificate for the income you received from every clients, but that does mean you won’t have to pay tax on it. Tracking what comes in and what goes out is easy with Xero cloud accounting, whether you are writing up paper invoices, or need a digital one, Xero can create the invoice and assign it to the clients and keep a track on all the money that you have received so when the end of the financial year hit – all your money is tracked and organised ready to file.
Organising Expenses
When you first start out expenses are low, so tracking in a spreadsheet can be the easiest way to go. But once you start growing, so does your expenses. You need to include all of your expenses in your tax return so your taxable income is as reduced as it can be. With Xero you can connect your bank feeds and all the expenses from your bank account are there, ready to be coded and deducted from your income. Pay for things in cash? Not a problem, you can upload your receipts to Xero and pay them from a cash account, so they aren’t missed. Its really that simple!
Having Savings
One aspect of my first year in business that I was prepared for was the tax bill. I saved as much of my contract work as possible so that when the Tax Man hit, I was prepared for it. This is good over your overall financial health, but it also means that you wont have any nasty surprises. Sure, no one likes to pay taxes, but knowing I have the money to cover whatever the number is thrown my way makes things super helpful and much less stressful.
Using the Right Tools
Nothing irks me more than feeling like my finances are messy and I have lost control.
With the tech world going crazy over new apps and different software’s there is only so much one can manage. I like to use Xero for my business income and expenses however for personal budgets and tracking there is a multitude of apps you can connect to Xero, pocketsmith is just one to mention.
Make the most of the end of the financial year – sign up with Xero and get 50% off your first 4 months subscription.
