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Book-Keeping Essentials

On Dec 01 2013
Tagged as:
  • Investing


While buying well & securing an expert team are crucial in saving money & getting the most out of your investment, many investors undermine themselves with simple bookkeeping errors. Waiting until the new tax year comes around to keep an eye on your bookkeeping could see you miss out on hundreds of dollars’ worth of claimable items.

Book-Keeping Essentials

Keeping and Eye on Your Book-Keeping

Keeping your Books in Order Really Matters Ma

While buying well & securing an expert team are crucial in saving money & getting the most out of your investment, many investors undermine themselves with simple bookkeeping errors.

Waiting until the new tax year comes around to keep an eye on your bookkeeping could see you miss out on hundreds of dollars’ worth of claimable items.

With $7.3 billion missed out nationwide in claimable expenses, according to a recent Commonwealth Bank study, or an average of $1,000 per taxpayer, property buyers must be more astute than ever to ensure that they don’t miss out.

Those in the 18 to 35 age bracket lose $2.5 billion more than their 36 to 50 year old counterparts, and the number one reason for this is misplaced receipts – something 51 per cent of taxpayers admit to, the study indicates.

This can also waste valuable time, with the average tax payer spending 2.2 hours looking for receipts and supporting documentation.

This appears to be an increasing problem, as our lives become more and more digital in nature.  It is becoming impractical to keep paper receipts and when it comes to tax time many people simply can’t find them.

On top of this, many transactions are now carried out online and therefore the need for paper receipts is slowing disappearing.

Creating a System

For investors it is essential to have a system in place to manage information that comes through including, quantity surveyor reports, receipts of legal fees and improvements to the property.

Despite the complexities of owning a property, many people still use the shoe box system.  Whilst this isn’t necessarily a bad way to store paperwork it can be more effective to digitise all related investment documentation as this will also save time down the track.

One way to keep track of your information is through an excel speadsheet with a column for what the item is, a column noting the date, a column for the cost and a column for the running totals.

Photocopying receipts, documents, letters and other information can also be beneficial, as they are less likely to be lost in a searchable computer environment.

It is also better to err on the side of caution when it comes to tax and scan everything – especially if you are uncertain about whether you need a particular document.
 

Knowing What to Keep

Having knowledge of what the ATO focuses on when it comes to your claims can also assist in remembering which documents are crucial.

Losing the documents may mean a calculation showing a higher capital gains and therefore tax relating to it.

Unless it is a tiny amount, you’d want to be keeping the receipts. The expenses will quickly add up.

The best idea is to keep everything and allow your accountant to make the decision as to what you can claim.

However, while keeping everything is a good idea, there are still many areas of documentation that can slip through the cracks.

This can include things that first time investors still trip up on, including remembering to keep a logbook for any travel/car expenses relating to a property, and a diarised account of any inspection trips to properties detailing reasons, timing and purpose for the trip.

Finding Out More

Investors without an accounting background and who are new to the space are frequently left confused when it comes to tax and accountancy issues.

While it isn’t necessary to have an accounting degree, some knowledge is desirable. For starters there is a wealth of knowledge on the internet and forums.

Subscriptions to newsletters and online journals can also be helpful including the ATO website.

Investors should constantly be asking their accountant for more information and reading up on how they can improve their strategy and knowledge.

New investors should always seek out advice and information when it comes to their financial situation and tax return.

For further property investment insights and all the latest property market news visit www.spionline.com.au

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