Taxation time must be the most dreaded nightmare for everyone each year. Why do we delay the inevitable by throwing the receipts into a drawer and put off the task of recording them either into a book or onto the computer?
Do not waste time looking for receipts in the bottom drawer at the last minute. Start collecting them from the beginning, on the first day of July of each financial year. The cheapest way is to purchase an expandable, alphabetically indexed file; you could rename these to suit your particular requirements. Then buy a Journal or a ledger with columns in. Across the top of the columns, you need to record the different types of purchases your particular business buys.
If for instance, you have a lawn mowing business. Then you could have columns for each of the following: Date, Company, Item Description, Plant, parts, fuel and oil, office stationary and postage, insurances and Vehicle licenses, miscellaneous items, and last a Total column.
If you are recording your information in the computer, then the simplest program for this is to use excel. It has the columns there ready for you to use. You can expand the width of these columns to suit your needs. This program will also add the figures quicker than you can blink, which is great.
Now you are ready to record every receipt, of any article that you purchase for your business, no matter how small the amount. When you have entered them, place the receipts in the appropriate file matched to your column names.
With that sorted, you need to keep and record all your checkbook purchases, especially the ones that you have no receipts. A checkbook on its own is not sufficient proof without a receipt. You will need to keep all invoices, statements, and sales dockets. This will also apply to any credit cards or charge accounts. Keep a record of the bank charges and the bank interest paid to you. If you spend a few minutes doing this every week, then you will never lag behind again.
You will need to record all income received and owing to you. Cash purchases, keep those receipts, and record them in a separate column, as they will be part of your income.
You may be eligible to claim many other deductions such as, child support, loan repayments, donations to charities and alimony. Record super all superannuation payments. Keep all your banking statements.
Legally you should keep all your receipts and records for three years from the day you record your tax. Although I would suggest that, you keep the official tax returns indefinitely.
By following this simple procedure each year, then you will have nothing to fear at tax.