Countdown to tax time: reconcile income accounts

Accurate business reporting, particularly this time of year is crucial for your business.

Make sure you review the income each month. Your income records on your Profit & Loss for the period 1 July 2015 to 30 April 2016 need to be accurate. It is this income that you will pay tax on.

Review your business main source of income

• Review your main source of income and make sure there are GST codes are on every transaction.
• If you have other deposits that are not business income sources such as tax refunds, GST refunds, capital investment, they need to be re-allocated to the correct account.

Review interest on income

• Transactions that have interest on the income are to be recorded, but make sure the N-T code has been used on these transactions.
• If there are other deposits that are not interest income in this account they should be re-allocated to the correct account.

Review refunds of expenses

• Refunds of expenses will need to be entered, alternatively refunds can be posted against the expense that it relates to.
• Make sure the correct GST code has been used on these transactions. If the original expense had GST in it, then so too would the refund.

Avoid these common errors made to recording business income:

Many businesses tend to deposit capital such as loan funds, tax/GST refunds and proceeds from asset sales to business income. This will affect your Profit & Loss and make it seem that you have made more profit than you really have.

If you think you need help with your business income accounts, contact your bookkeeper or accountant. Find an MYOB Partner here.

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The information provided here is of a general nature for Australians and should not be your only source of information. Please consult an experienced and registered tax agent as each small business’s circumstance will vary.