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3 Tips To Help You Save More Money During Tax Season

Taxes are nothing to be excited about, and for many people, it is nothing but a hassle. Plus, it is an activity where individuals lose money, so it isn’t something people look forward to. However, what is to be excited about is the many ways one can reduce the taxes one has to pay overall. In other words, there are many tactics to save money on taxes, and it all starts even before tax time arrives!

Today, we’re going to share various tips on how you can prepare yourself for tax time to maximise savings:

1. Don’t Forget To Donate

Every donation that’s over $2 is tax-deductible. As such, it is a great idea to give back to the community, and donating itself is a sensible way to spend your money. After all, not only do you better the organisation or group you contributed to, but you also build your reputation as a company that cares. 

That said, remember that when you do get your refund, know that you won’t see your donations come back immediately. It’ll come back slowly as a percentage, and the amount will come off your taxable income.

2. Claim Anything Job-related

Most of the things you purchase that are job-related can be claimed. For instance, an office chair, an office table, a new printer, and the like that are all used for work can be claimed. Even things that are partially used for personal and commercial use as a vehicle can also be claimed, but you just need to make sure that you properly calculate the amount to be deducted.

If you are unsure whether an item you purchase can be claimed, hold on to the receipt. You can reach out to an accountant to help you understand whether it is claimable.

3. Get Your Expenses in Before June

June is when tax time starts, and for any expenses that come after June, you’re going to have to wait a full year before you can claim on them. As such, if at all possible, get all the expenses in before June. 

Remember, the only way you’re going to get your expenses in before June is if you’ve put in the hard work of ensuring they do in the first place. If you find yourself falling behind or becoming a little too relaxed with your record-keeping and the like, then it is time to remind yourself to step up.

Conclusion

Tax is never easy, and many people easily get lost trying to stay on top of their taxes, let alone trying to claim from it. If you are facing the same issue, chances are you might run into tax issues that lead you to costly consequences and limit how much savings you can make. Following the tips above can help, but consider hiring an accountant if you still find yourself lost amidst tax seasons! Their expertise can help you stay on top of your taxes all year round, and when the time comes for tax time, they can ensure that you meet all your tax obligations and make the most out of your savings!

SMB Accounting offers various small business accounting packages and other services such as audits and tax returns to help small companies maintain their financial well-being. If you are looking for accountants at Sunshine Coast to help you with tax returns, work with us today!

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Company Director? New Director ID required!

All company directors will now be required to apply for a director identification number (DIN) by 30 November 2022. The main purpose of DIN is to trace or identify the director’s history or director’s relationship across different companies. This legislation will help the regulators investigate for any unlawful activity, particularly the phoenix activities, to promote good conduct and improve the integrity of corporate data.

Starting November 1,2021, directors can now apply for DINs using the newly formed Australian Business Registry Services (ABRS). All the directors must apply for themselves because they need to verify their own identity. It is required that the director must set up first a myGovID before starting the application and usual identity documents must be provided such as driver’s license, passports, birth certificates and Medicare cards.

What is a DIN?

A Director Identification Number is a unique identifier you need to apply for once and will keep forever even when changing company.

When to apply?

The dates that directors will need to apply for DIN will vary depending on when they become a director.

Corporation Act 2001 (Corporation Act)

Date of becoming a director Date DIN Application to be made
On or before 31 October 2021 By 30 November 2022
1 November 2021 to 4 April 2022 Within 28 days of appointment
On or after 5 April 2022 Before appointment

 

Directors of the Indigenous corporation which are governed by the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (the CATSI Act) have separate obligations to apply and have a further 12 months to obtain DIN.

Date of becoming a director Date DIN Application to be made
On or before 31 October 2021 By 30 November 2023
From 1 November 2022 Before Appointment

 

Failure to Apply for a DIN?

Under the new legislation, there will be both civil and criminal penalties for non-compliance, using multiple Director Identification Number for one person, and or uses false information or misrepresentation in their application.

 

How can we assist you?

If you have any questions regarding the new legislation discussed and how will this impact you or your business, please contact our firm SMB Accounting.

 

 

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4 Tips to Help You Discover and Hire the Right Accountant

Many companies believe that they are alright without hiring an accountant by their side, that they can manage their finances without the help of a professional. While this is possible for small companies, the larger the company gets, the more they realise that staying on top of finances while managing other business functions is increasingly challenging. In fact, this balancing of activities can pull down productivity and work quality, leading to more errors everywhere and including accounting. As such, working with an accountant on the get-go is vital to ensure the company’s flow of cash is kept in check, ensuring each dollar is used to its fullest potential. 

That being said, if you are interested in hiring an accountant for your business, you’re in luck. Today, we’re going to share a few tips to help you discover and hire the best accountant to help you manage your finances:

1. Understand What You Need

The first thing you must always do to pick the right accountant for your business is to know what you need. Do you need bookkeeping services? Are you looking for a short-term or a long-term partner? What other services do you need from an accountant? By answering these types of questions, you create a list of requirements to make sure the accountant you work with meets your expectations. This is because different accountants offer different services and even has a different specialisation. 

2. Take Advantage of Referrals

Never underestimate the power of referrals. If other business owners who are similar to you have found success with the accountants they’ve worked with, their tips and pieces of advice can be invaluable to you in your search for accountants. You may be referred to individual accountants or even the business that employes them. Of course, you can up your research by checking online reviews, checking their social media, and even taking a peek into an accountant’s or accounting firm’s website. This will help you quickly discover potential accountants that will help you meet your goals.

3. Know What to Ask

When you finally find an accountant you like and talk to them, you should be asking plenty of questions. For example, ask about their qualifications, what the fees are, what accessibility they offer, and what time frame they work to complete their activities. If you are reaching out to a firm, you can also ask who will work with you. These questions will help you identify what exactly you can expect out of them and whether or not those expectations are what you’re looking for.

4. Interview Several Candidates

You might be tempted to stop looking for accountants on your first decent accountant to work with. However, this is a no-go. It is far better for you to spend the time interviewing several candidates to find the best one, not an “okay” one. The best accountant will make a difference, and that difference is that they can help your company stay on top of finances and use it to maximise growth!

Conclusion

It will take some time for you to find the perfect accountant to work with to help you stay on top of your finances, but don’t take any shortcuts. If you do, you only run the risk of working with an accountant that will barely meet your needs and expectations, putting you in danger of financial trouble. As such, take your time. You might not find one today, you might not find one tomorrow, but you will eventually discover the accountant or accounting firm that offers exactly what you need, ensuring that your business’ future is as bright as it can be!

SMB Accounting offers various accounting services, including tax returns, audits, and more, to help companies manage their financial needs effectively and efficiently. If you are looking for excellent accountants in Australia, contact us today!

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4 Important Tax Deductions That You Have to Know About

While we often take it for granted, taxes are incredibly important. This is why you’ll want to invest an ample amount of time to make sure that you get everything right. Failing to be thorough when it comes to taxes will surely lead to you losing a significant chunk of money.

When it comes to doing taxes, one of the most important things that you’ll want to focus on is deductions. Through deductions, you’ll be able to minimize the amount that you have to pay in taxes. The tricky thing about this is that people tend to either forget or are completely unaware of the deductions that they are eligible for. This is why we thought it would be useful to put together a brief refresher on this subject. If this is something that you’re interested in knowing more about, read on for a list of four important tax deductions that you have to know about!

Tax Agent Fees

Many of you may not know this but the fees that you pay to a tax agent or a tax consultant are actually tax-deductible. This means that if you made use of their services while preparing and lodging your tax returns last year, then you are able to cite it as a deductible. And while this won’t completely offset the costs of the services, this is another incentive to make use of professional services when filing for your taxes.

Union Fees

If you’re part of a union, you’ll be glad to know that your union fees are tax-deductible as well. To add to this, members of groups that are related to your profession that charge a fee for membership are also granted a tax deduction on the fees that they have to pay.

Work-Related Car Expenses

For those of you who have to drive around in your personal vehicle in order to perform your duties at work, we’d like to remind you that all car-related expenses can be a tax deduction. This includes but is not limited to fuel, maintenance repair fees, and other costs attached to using and maintaining a car. Now, there are two methods for calculating this deduction. You can either keep a 12-week logbook or you can make use of the cents per kilometre method. The cents per kilometre method derives the deduction from the total kilometres travelled in your car while you are doing work that generates income.

Home Office Expenses

Lastly, it’s important to note that your home office expenses are also tax-deductible. And while this may not be relevant to some of you, people who spend a considerable amount of time working from home will surely benefit from this. You can claim the cost of using your personal computer for work as well as any equipment or tools that you need for your job. If you work to spend all of your work hours at home, you can also claim the occupancy cost of your home office space as a tax deduction.

Conclusion

We hope this article proves to be useful when it comes to helping you with your taxes. While this may seem like a lot to take in, be sure to keep all of this information in mind as it will surely make a difference when it comes to doing your taxes. Feel free to refer back to this article whenever you have any questions about tax deductions.

SMB Accounting has knowledgeable tax consultants who can help you get started with taking care of your tax refunds. We make sure that our clients use their tax refunds wisely, and we also offer other services such as accounting and business advice. Contact us today for a consultation!

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Audited Financial Reports: When Does Your Company Need It?

All business owners can agree that their company’s finances are one of the most important operations that help keep their business running. With that being said, dealing with finances can be incredibly challenging but still necessary to ensure you provide an accurate record of your financial health—that’s where an audited financial report comes in. 

An audit is used to obtain an independent opinion on the financial report of a company or organisation. This information will boost the credibility of the information provided and improve confidence for intended users of the financial reports. Besides that, an audit will have to be presented per accepted accounting principles, and because of this, working with an experienced accountant is a must. 

In addition to boosting your credibility and user confidence, audits also promote consistency and objectivity in financial reports, presenting your company as true and fair. To that end, when are audits required?

When are Audited Financial Reports Required?

When You Have a Charity or Non-Profit Organisation…

For charities and non-profit organisations with revenue under the review or audit thresholds don’t need to submit the Annual Information Statement. Note that you’re not required to provide financial statements to the ACNC. However, it is highly recommended that you consider your constitutional requirements, which may require reporting obligations to members. 

When You Have a Large Company…

When your company evolves to a large proprietorship, your business must be audited under the Corporations Act. To know if your company falls under a large proprietary company is if, at the end of the financial year, your company meets the following criteria:

  • You have a consolidated revenue of &50 million or more;
  • You have consolidated gross assets of $25 million or more;
  • You have 100 or more employees;

When You Have a Small Company…

Usually, small proprietary companies aren’t required to prepare a financial report. However, if the ASIC or shareholders require a report, then you must comply. But seeing as this is a case-by-case basis, you must work with a credibly accountant to ensure that your finances are on track and if you’ll be requiring a financial audit. 

Why Do You Need a Financial Audit?

  • Companies, organisations, or charities seeking to obtain a grant, investment, or external funding may have to undertake an audit. This is because this may be part of qualifying criteria that will satisfy the provisions of the grant;

  • Some lenders may ask companies to provide audited financial reports if your business would qualify for a loan or satisfy loan requirements.

  • In some cases, businesses would like to change ownership or sell their company; because of this, a buyer may require a financial report to see the true value of your business.

  • Some companies and organisations may need an audit specified for the constitution, rules or other documents. Because of this, you’ll need to work with a credible accountant and auditor to create a financial report. 

The Bottom Line: Audited Financial Reports are a Crucial Part of Any Organisation or Company

Seeing as audited financial reports are a huge requirement for some organisations, to stay compliant, you must work with a trusted accountant and auditor to ensure that your financial reports stay accurate. Otherwise, you may be dealing with a plethora of financial-related issues that may impact your company. 

How Can We Help You?

There’s no denying that financial audits or reports can be incredibly overwhelming for some businesses. Thankfully, SMB Accounting has a team of highly skilled accountants who are equipped for this job.

Our accounting firm offers various financial services like individual tax returns, accounting for small businesses, self-managed super fund audits and more. If you’re looking for a reliable accountant in Caloundra to help you run your business, reach out to us today!

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Taxing Wisely: 5 Tips to Use Your Tax Refund

Paying taxes is an activity that any law-abiding citizen must do. By paying taxes, there are times when you get a tax refund. As the name suggests, a tax refund is an excess of taxes that are given back to the taxpayer.

Most people would agree that a tax refund is a lifesaver. This is because an annual tax refund gives you many options on what to do with it, such as paying back debts or simply saving them for future use. In other words, a tax refund has a significant effect on your finances.

How exactly do you use your tax refunds wisely? This article lists down some ways that you can do this. Read on below to learn more.

#1 – Super Contribution Top-up

According to the Australian Securities and Investments Commission (ASIC), the average single person who retires at 65 with a “modest” lifestyle will need approximately $300,000 today to retire. On the other hand, those who want a “comfortable” lifestyle in retirement will need roughly $544,000.

For most people, those are massive numbers. If you add to your super very early on, it gives your savings a lot of time to grow. Simply get in touch with a superannuation advisor, and they will tell you how to transfer your tax refund into your super fund. It may seem like a small thing now, but your future self will thank you once you retire.

#2 – Term Deposit for Your Children

If you have children, your tax refunds can be used for their benefit. Tax refunds are like a long-term investment that you can use for your children’s big-ticket expenses, such as their education or their first car.

While not everyone has term deposits on their plans, it pays to set aside some funds for your children—especially considering the rising living costs in the country.

#3 – Buy Work-Related Equipment

Buying work-related equipment such as computers is no easy task. If you don’t have enough money, chances are you’ll be stuck with a subpar piece of equipment that hinders your job performance.

Work-related items that cost more than $300 must be depreciated over the “life” of the item. If you buy them by the end of a financial year, then the benefits on your subsequent tax will be small.

On the other hand, your depreciation calculation will cover more time if you buy them between July to August. In other words, it’s a bigger deduction on your next tax return.

#4 – Pay Off Debts or Loans

If you have credit card debts or personal loans that you’re paying off for a long time, then it’s recommended that you use your tax refunds to pay for them.

It’s a good idea to do so because your interest repayments will go down as soon as you lower your outstanding balance. Aside from that, you can now use the money for yourself instead of it going to your lender.

#5 – Put It in a Mortgage Offset Account

If you have a mortgage, chances are your mortgage provider is offering a mortgage offset option. A mortgage offset account is like a savings account, but it works a little differently. Your offset balance is deducted from your outstanding mortgage loan balance to calculate the interest component of your mortgage payments.

Because of this, you end up paying less interest for your mortgage, which leaves you with more money. You can pay off your mortgage quicker while your offset account balance is ready to be used in case of an emergency.

Conclusion

Tax refunds are money that comes back to you, so you must use them wisely. You can use them to pay debts or save them for later if a financial emergency occurs, as well as keep them as deposits for your children. In the end, you’ll be glad you have done so, because you will be able to get out of a bad spot quicker.

SMB Accounting has knowledgeable tax consultants who can help you get started with taking care of your tax refunds. We make sure that our clients use their tax refunds wisely, and we also offer other services such as accounting and business advice. Contact us today for a consultation!

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Your Guide to Claiming Home Office Expenses in 2021

Even if the room is not set aside purely for work-related purposes, you may be able to claim a tax deduction for the costs of running your home office, provided you did some of your work from it in the previous financial year. These critical tax deductions typically cover the expenditures of working from home or running a home-based business.

The question is, how can you claim your home office expenses this year? This essay will serve as a roadmap for you.

What are the new arrangements?

Due to COVID-19, the Australian Taxation Office (ATO) made specific provisions last year to make it easier for persons to claim deductions for working from home.

Rather than calculating expenditures for specific running expenses, the new ‘shortcut technique’ allows people to claim a rate of 80 cents per work hour for all their running costs.

This rate is available to multiple people living in the same residence. For instance, a couple living together might each claim the 80 cents per hour rate.

Which strategy should you use when claiming?

You have three options for calculating your home office expenses:

Shortcut Method

Claim a rate of 80 cents per work hour for all additional running expenditures.

Fixed-Rate Method

Calculate the work-related portion of your phone and internet expenses, computer consumables, stationery, and the decline in value of a computer, laptop, or similar device at a rate of 52 cents per work hour.

Actual Cost Method

Claim the portion of all your operating expenses directly relevant to your job, which you must calculate on a fair basis.

Whatever approach you use, please follow the following rules:

  • The money has to have been spent by the taxpayers and not repaid.
  • The claim must be directly tied to income generation.
  • There must be documentation to back up the claim.

What are the expenses you can deduct?

You can claim the following expenditures if you are claiming using the fixed-rate method or the actual cost approach.

Running Expenses

Home office operating expenditures, such as energy, gas, and office furniture depreciation, can be deducted (e.g., desk, tables, chairs, cabinets, shelves, professional library).

You should keep diary/logbook documentation for four weeks to prove a pattern of working from home and justify the number of hours you are claiming, exactly like with a motor vehicle claim.

When no additional costs are spent, such as when you work in a room where others are watching TV or when the income-producing use of the residence is incidental, no deduction is allowed.

You’ll need receipts for the following expenses:

  • Work-related equipment in the home office.
  • Repairs to the home office, as well as furniture and equipment utilised for business reasons.
  • Cleaning costs for the home office.
  • Any extra costs associated with maintaining a home office on a day-to-day basis.
  • Keep a journal entry for each of your minor expenses ($10 or less) that total no more than $200.

Telephone (and mobile phone) and Internet Expenses

If you can recognise work or business calls from an itemised phone bill, you can claim the deduction for the billed percentage related to work or business.

For the whole year, a representative four-week period will indicate a pattern of internet and telephone use.

If you are “on-call” or compelled to contact your company or client frequently, your phone rental expenditures may be partially deductible.

Equipment Depreciation Expenses

You can claim depreciation on home office equipment such as computers, printers, photocopiers, scanners, and modems, but it must be allocated to the equipment’s use for work or company purposes. You can claim depreciation on office equipment and furnishings if you use the actual cost approach.

Occupancy Expenses

Only if the residence is used as a place of business is a claim for occupation expenditures allowed. The claim must be filed as an apportionment of total expenses incurred on a floor area basis.

  • Rent
  • Interest on a mortgage
  • The cost of water
  • Repairs
  • Premiums for homeowners’ insurance.

If you sell your home in the future, being able to claim these expenses may influence your principal residence exemption for capital gains tax reasons.

When does a house become a business?

The following indicators, none of which are conclusive on their own, may help to determine if a designated area contains the characteristics of a business:

  • The area is marked as a business district.
  • The area is not readily adaptable or suited for private or domestic use in the home context in general.
  • The region is used solely or virtually exclusively to conduct business.
  • Client or customer visits are typical in this area.

You are not entitled to a deduction for occupation expenses if you use your house to carry out income-producing activities as a matter of convenience. It would be unusual for a worker to be able to claim travel expenses.

Working with a tax professional can help you avoid common mistakes while filing your tax return and maximising the amount of money you get back. Please contact your trusted accountant on the Sunshine Coast from SMB Accounting for assistance with your tax return!

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8 Factors to Consider When Choosing Accounting Software

When running a small business, you’re typically working with a small budget, which means you’re always looking for the most cost-efficient way of doing things. You don’t have the time to manually do your business’s numbers, so it makes sense to choose from the many accounting software packages available. However, finding the best one for your needs can be challenging, especially when the software seems similar.

Fortunately, a few things can help you select a small business accounting software that perfectly matches your company’s needs. Here are eight factors to think about when choosing accounting software for your business:

Overall Functionality

Before you start your search, write a list of the core functions that you need. Whether you want to raise purchase orders or hold a stock of raw materials, ensure that your chosen software accommodates all that. Although all adequate accounting systems will help you keep basic accounting records, they vary in functionality, making it essential to determine what you want before starting your search.

Industry-Specific Capabilities

Depending on your business’s industry, you may need specific functions out of your accounting software. If you’re an online business, you’ll want accounting software that easily integrates with eCommerce programs. For this reason, avoid limiting your search to popular, general accounting packages, as you might not get the most value from them.

Multi-currency Abilities

If your business regularly posts transactions in other currencies, you’ll need software that offers multi-currency functionality, allowing you to post transactions in foreign and home currencies. If your other assets and liabilities are in different currencies, you must perform currency revaluations, making this feature vital in the software you choose. It’s important to note that foreign currency functionality isn’t a standard inclusion in business accounting systems, so ensure to check for it when you find software that seems to fit you.

Cloud or Desktop Software

Before the Internet, desktop software reigned supreme. Nowadays, cloud software is the norm, as you can access your accounting system regardless of where you are. Other people can also enjoy access to your accounts to take care of specific tasks for you, like your accountant or bookkeeper. However, you’ll need Internet access for cloud software to work, which is a factor to keep in mind if you have an unstable connection. 

Bank Integration

Another feature that makes accounting software incredibly convenient is bank integration, allowing you to download your bank transactions and complete bank reconciliations. If you automate these processes, you’ll save a lot of time and effort. 

Scalability

Since you intend to make your business grow, you’ll need software that can grow with it. An expanding business naturally means more transactions, which means you’ll need software that can process a steep increase in volume. Be sure to check the upgrades you may need to keep up with the future growth of your business and how much they’ll cost.

Security

Security is an essential feature in the software that you’ll need to inspect yourself. You must outline what each user can do or see on your system, especially when you have multiple people using the software. Look for role-based security as well for added defences.

Customer Support

Lastly, choose small business accounting software that offers exceptional customer support. When you first use the system, you’ll need to be walked through its features, requiring training from the software provider. Once you get accustomed to the system, you’ll also need continuous support. Opt for software with 24/7 support, mainly when you use the weekends to update your accounts.

Conclusion

Finding the perfect accounting software is crucial for every business, as it will help you keep a close eye on your finances and ensure you stay afloat. By considering these factors, you’ll find software that perfectly suits your needs.

SMB Accounting is a team of business accountants on the Sunshine Coast offering small business accounting, individual tax returns, accounting software consulting, and various audits. Contact us today to learn more about how we can help your business!

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Financial Statement Basics Business Owners Should Know

Financial statements are an integral part of any business, as they explain the company’s performance in terms of finances and profitability. Some of the basic financial statements business owners need to be familiar with include the balance sheets, income statements, and cash flow statements. 

What Is a Balance Sheet?

The balance sheet lists down a business’s assets, liabilities, and equity. This shows the company’s financial position at a given point in time. 

A company’s assets include anything that can generate revenue, and they may be tangible or intangible. Tangible assets include cash, equipment, machinery, vehicles, and inventory, among others. On the other hand, intangible assets could consist of copyrights, patents, trade names, and trademarks.

Next, there are liabilities. A liability is essentially something the company owes. These could include accounts payables, loans, mortgages, accrued expenses, and more. 

Lastly, there’s equity. One of the basic formulas in accounting is “assets – liabilities = equity,” which shows a company’s true value. Equity is also commonly referred to as owner’s equity, shareholder’s equity, or net worth, and it could include retained earnings, common stock, and additional paid-in capital.

What Is an Income Statement?

The income statement shows a business’s income and expenditures for a period of time. It will basically indicate whether a company is making a profit or a loss. The income statement also provides information regarding operation capabilities, returns on investments, financial flexibility, and risks. 

What Is the Cash Flow Statement?

The cash flow statement or statement of changes in financial position shows the cash inflows and outflows of a business. These cash flows can be categorised into operating activities, investing activities, and financing activities.

Generally, the operating activities show where the cash came from and how it was used concerning a company’s daily operations. These include cash from sales and inventory. On the other hand, the investing activities are cash activities related to the buying and selling of assets. Lastly, the financing activities involve a company earning money from bond issues or stocks.

How Are Balance Sheets and Income Statements Connected?

These two financial statements connect through the net income account. By using an income statement formula, a business can generate its income statement. This formula will calculate the net income by deducting the expenses from the revenue.

Since income statement accounts are temporary and adjust back to zero at the end of every month and year, the net impact of the income statement is shown as the net income on the balance sheet. So, the ending balances of the income statement get carried over from one month to the next in the balance sheet.

How Are Balance Sheets and Cash Flows Connected?

The cash flow statement will add up all the inflows and outflows to get the net change in cash for a given period. This ending balance should be equal to the balance sheet’s ending cash balance. 

Conclusion

The balance sheet shows a company’s financial position at a point in time by listing the assets, liabilities, and equity. On the other hand, the income statement reflects the company’s income and expenditures. The ending balance of a month’s income statement is carried over to the next month in the balance sheet as the net income. Lastly, there’s the cash flow statement which documents the cash inflows and outflows of a company. The ending cash balance of the cash flow statement and the balance sheet must be equal. 

For your business’s accounting needs, you can count on SMB Accounting to do the job right. We are accountants in Sunshine Coast, QLD, that is fast becoming a leader around Australia through outstanding service to our clients, both business and individuals alike. We offer a range of accounting services, including business advice, taxation and XERO/MYOB/Quickbooks consulting. Contact us today to get started!

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3 Things to Consider Before Auditing Your Trust Account

Trust accounts are a unique way to keep your assets and earnings safe. Basically, an agent will handle and manage them for you until such time that you will need them again. Think of it as a way of asking a friend to look after your valuables, and the only time that they will give it back is when you will finally use them. Of course, the conditions in a trust account are a bit different. The grantor has to surrender the assets to the third party or the trustee first before they may even be given to you, the beneficiary, at the right time. In any case, the principle is basically similar.

For the main reason of keeping tabs on the records and checking for any discrepancies, you may want your trust account audited by a professional. However, not everyone is familiar with the ins and outs of the process. In such a case, you must first consider the following pointers before sending in the auditor. Not only will they ensure that the process goes smoothly, but they will also enable you to understand the procedure as a whole.

1. Keep a Receipt of All Your Processes

Receipts are a great way to have a paper trail of your own. Most of the details that the auditing process will touch on are included in them. If you do not save them, you may be overwhelmed by the amount of backtracking that you’ll have to do just to find all the necessary evidence to debunk any error in the computations. Receipts will support your claim if the total by the end doesn’t add up. The auditing process is not simple; that is why you should prepare all the necessary paperwork to ensure that your auditors will not have a hard time keeping tabs on the numbers.

2. Utilise Accounting Software to Help With the Process

You do not have to worry about this if your auditor already has all the necessary tools to accomplish the task efficiently; however, you may still need to coordinate this with them. Accounting software will definitely make it easier for everyone, not to mention quicker and accurate.

Most accounting software today even has the functionality of reconciling the numbers between the account and the other transactions involved in that account so that you and the other parties will have a clear view of what went on with your trust account.

3. Create a Digital Footprint of Your Transactions

This is somewhat similar to the first pointer, but you will have a digital copy of all the numbers at your disposal instead of keeping physical receipts. Your auditors will not have a hard time trying to track your account transactions, and neither will they encounter any miscalculations as the digital trail is enough to piece together a “story” of what is currently happening with your trust account. Don’t worry about your privacy, as the only ones who will access your digital trail would be your auditor, your grantor, and your trustee. Think of this method as your security camera, a sure way of monitoring how and when the assets were handed to you by the trustee, going as far as to include the exact amount.

Conclusion

There are a couple of things to consider when auditing your trust account. While it may be tempting to jump ahead to the process itself, a few preparations are set in place to ensure that you and the auditor will not have a hard time analysing the numbers. Keeping tabs on the process and the transactions will not only show your grantor that the assets they’ve entrusted with the trustee were delivered on time, but it will also give them an idea of how you were able to use them once you’ve received them. Prepare for the audit and see the appropriate results.

If you would like to get an accurate financial audit of your trust account, look no further than our expertise here at SMB Accounting. We specialise in individual tax returns, small business accounting, SMSF audits, among other things. Contact us today for more information about our accounting services.

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