Getting creative with ‘getting it organised’
OK so ‘getting creative’ and ‘paperwork organisation’ are probably not sitting very well together for you so far in this sentence however they are interestingly related.
As we know, lots of people battle with the $ basics: understanding how things like compound interest, interest free periods and mortgage offset accounts work. And many struggle to set and stick to a personal budget. However the biggest problem I hear about are people trying to deal with the mountain of bookwork, receipts and what to do with it all. By the time clients have got to the point of asking me to help they have got themselves in a real literal mess! This is where I recommend a ‘getting creative’ strategy to managing all your receipts, invoice, bank statements etc. Not to be confused with ‘Creative accounting’ which capitalizes on loopholes in the accounting standards to falsely portray a better image of the company.
Compound interest, interest free periods and personal budgets will keep for another post. For this post, lets look at getting creative with getting it all organised.
1. Get your paperwork together –
For some of you that would be as easy and clearing the contents of your desk into a washing basket or emptying out your hand bag. Thats OK as long as you get it all into one spot.
The next step is probably the most important in the getting creative process. It’s called the big ‘chuck out’! You’ll be really happy to know that you only need it keep about 25% of the paperwork that you’ve been hanging on to. Just focus on the current tax year and all the rest can go into the recycle bin.
Here are some documents for 2013/14 that you’ll need to have ready to prepare your tax return, file and keep.
- Payment summaries – These detail your income from your employers, super funds, Centrelink or Department of Veterans’ Affairs. You will have one for each job you have been paid for in 2013/14.
- Bank statements – To show how much interest you have received. This can be printed from you internet banking.
- Shares, unit trusts or managed funds statements – To work out any dividends or distributions made to you.
- Buy and sell investment statements – These may be from your investment adviser or stockbroker if you bought or sold any shares.
- Records from your rental property – This should include information relating to a capital gain or capital loss from the sale of a property.
- Foreign income details – Details of foreign pensions or other foreign income received.
- Private health insurance policy statement – This will provide the information needed to complete the private health insurance section of your tax return.
- Net medical statements and receipts – These will help you work out any medical expense claims.
- Donation receipts – From any approved charities you contribute to.
- Educational records and receipts – If you can claim education expenses.
- Investment property receipts – These will help you claim the costs of repairs and maintenance to your investment property.
- Your spouse’s income and expenses – If you have a spouse, you will also need details of their income and expenses
2. Claim all your deductions –
The basic rules for claiming a tax deduction for work-related expenses are that you:
- Must claim the deduction in the same income year that you made the purchase
- Can’t claim an expense that has been, or will be, reimbursed
- May have to prove your claims with written evidence
We’ll look at claiming deductions more in another post however the point that I need to make her is that you don’t need to keep every little black and white/faded receipt that the dog has eaten and regurgitated. The ATO states that you need “written evidence to prove a claims”. This can be a combination of diary entries, credit card statements or email receipts. You can read the full details on the ATO website here
3. Get creative with it –
You’ll need some stationary: Red, pink, yellow, floral, neon whatever….knock yourself out.
– 3 Lever Arch files
– Some Dividers
– Some envelopes
My simple folder system works like this:
Folder 1: Tax
Use the dividers to write the current tax year. Aim for about 10 years in one folder. Throw everything in it to do with your personal tax, Payment summaries, bank interest, share dividends, etc. Take folder to the Tax Accountant (they’ll love you for your beautifully creative file).
Folder 2: Bank Statements
Folder 3: Business Receipts. Take this folder to your Bookkeeping so they can reconcile to year end
3. Get help –
If getting creative with getting everything organised doesn’t excite you just call for help. Not only will OneCloud Accounts do your bookkeeping but we are very experienced with sorting out major paperwork messes!! email@example.com