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Simplifying Sole Traders Tax Returns

Properly managing your finances as a sole trader is essential to creating a successful business. Taking steps to actively manage your finances throughout the year can make your sole trader tax return process simpler.

If you are a sole trader looking to manage your finances, this article is for you. In this blog, we discuss records to keep as a sole trader, keeping your records separated, a sole trader tax calculator, and how a sole trader accountant can help you.

What records to keep as a sole trader

Sole traders are required to keep records to prove their income and expenses for tax obligations. Some of the records a sole trader is required to keep includes the following:

1. Income records:

This includes invoices to customers, bank statements, and other documents that prove the income coming into your business.

2. Expense records:

This includes invoices, receipts, bills, and any other documents that are related to the expenses of operating your business. This is important to calculate the tax deductions for sole traders.

3. Goods and Services Tax (GST) records:

If you are a sole trader earning more than $75,000 per year, you are required to register for GST and keep your GST records. Some GST records include tax invoices to customers and invoices from suppliers.

4. Depreciation and capital assets:

If you have purchased capital assets such as vehicles or equipment, you need to keep records of receipts. This is useful to determine the depreciation and capital gains or losses for your business.

5. Loans and debts records:

This includes the likes of loan agreements, interest payments, and repayment schedules. This is useful for tracking your liabilities and expenses.

Keeping sole trader and personal records separate

As a sole trader, you are required to keep records, but things can get messy when involving your own personal finances. You may have wondered; how can I easily track my sole trader income and expenses.

1. Open a separate bank account:

Opening a separate bank account for your sole trader business can make it easier to track your income and expenses. Going through the process of manually separating your sole trader income and expenses from your personal account can be tedious. Opening a separate account means all your income and expenses are in one place and easy to access. This means sole trader tax deductions and income can be processed faster.

2. Use an accounting pack:

Using an accounting pack such as Xero can make the process of tracking your business’s income and expenses even easier. Using accounting packs is useful for sole traders as your finances are efficiently categorised and tracked.

Tax calculator – Sole Trader

Correctly calculating your tax as a sole trader is important to ensure you are meeting your tax obligations and you avoid any unnecessary penalties. A sole trader tax calculator can be used to calculate the tax payable for a given income year.

Use a Sole Trader accountant

If you are looking for a sole trader accountant, you have come to the right place. One Click Life is a tax specialist that can help sole traders manage their finances and lodge sole trader tax returns. Why choose One Click Life?

  • One Click Life offers a fixed cost of $249
  • $0 upfront costs
  • Dedicated tax adviser support
  • A tax return that takes you minutes.

Actively managing your sole trader finances can make your tax return process easier. Keeping records is important to prove the income and expenses you have incurred for the year are accurate. Sole trader and personal records should be kept separate and can be easily managed using accounting packs like Xero. Separate bank accounts mean tax deductions for sole traders can be processed faster. One Click Life offers easy-to-use tax calculators and tax processes that ensure your business will get the most out of its online tax return.

One Click Life can assist with your tax!

Want more out of your sole trader tax deductions? One Click Life allows you to complete your online tax return with the click of a button.

The easiest way to complete your tax return is by using an online tax agent. Why wouldn’t you use one if you could claim your online tax agent fees as a deduction on your next tax return? One Click Life does more than tax. We can also help with your Will, Health Insurance, and Mortgage, so you can enjoy the important things in life.