The Importance of Keeping Receipts for Tradies: Why, When & How

February 20, 2024
7
minutes to read
by
Jaala Alex
Table of Contents

As a tradie, keeping track of your finances will make tax time less stressful. By keeping accurate records, you can reduce your tax liability and avoid audit issues. One of the most critical aspects of financial record-keeping is keeping receipts. In this guide, we will explain why every tradie should keep receipts for tax time and provide tips and tricks for organising your accounting. Whether you prefer using a receipt book, shoe box, or automated accounting software like Thriday, you'll be well-equipped to handle tax time in no time by the end of the blog.

What Are Receipts? 

Receipts are a written, printed or digital proof of payment that shows the details of a purchase or transaction. There are two main types of receipts: payment receipts and cash receipts. 

Payment receipts are issued for payments made with debit or credit cards, while cash receipts are given for cash transactions. Keeping receipts is required by the Australian Tax Office, and tradies must track expenses for tax purposes. 

As a tradie, you'll want to keep every receipt for every purchase related to your business. This includes materials, supplies, tools, equipment, and services. Receipts help you track how much money you're spending and what you're spending it on. Additionally, receipts are essential for proving expenses to the ATO during tax time. 

When you keep receipts, you can also take advantage of tax deductions for your business expenses. For example, you can claim a deduction for the cost of materials or tools you purchased if they are directly related to your business activities. Without receipts, it's difficult to prove what you spent money on and how it relates to your business, leading to missed deductions or audit issues. In Australia, you are required to keep receipts for up to five years from the date the transaction occurred. 


"In Australia, you are required to keep receipts for up to five years from the date the transaction occurred."

Thriday Receipt Scanning

 

The Benefits of Keeping Receipts 

Keeping receipts offers numerous benefits for tradies. Here are some of the key advantages: 

1. Organising your finances 

Keeping receipts allows you to keep track of your expenses and income more efficiently. You can use receipts to create an itemised list of costs and track them against your income. By organising your finances with receipts, you can identify areas where you might be overspending or where you can save money. 

2. Reducing tax liability 

By keeping receipts, you can reduce your tax liability by claiming all applicable deductions. Receipts serve as proof of expenses, which can be used to support deductions on your tax return. This can help you maximise your tax deductions and reduce the amount of tax you owe. 

3. Claiming deductions 

Receipts help you claim deductions for expenses directly related to your business activities. This can include expenses for materials, equipment, tools, and services. Without receipts, it can be challenging to prove that an expense was related to your business, which could result in missed deductions. 

4. Avoiding audit issues 

If the ATO audits your business, you must provide evidence to support your deductions and expenses. By keeping receipts, you have documented proof of your expenses, which can help you avoid audit issues. In the event of an audit, you can quickly provide the required documentation to the ATO. 

The following section will discuss how to keep receipts, including options for receipt books, templates, and digital tracking. 

Thriday Receipt Summary

 

How to Keep Receipts 

There are several ways to keep receipts, depending on your personal preferences and business needs. Here are some of the most popular options: 

  • Receipt Books - Receipt books are a common way to keep track of receipts. They come in various sizes and formats, including single and multiple-copy books. You can purchase receipt books from office supply stores or online retailers. When using a receipt book, fill out each receipt with the necessary information, including the date, the amount paid, and a description of the purchase. 
  • Shoe Box - Keeping a shoe box of receipts is an old-fashioned way for businesses to store their receipts in one place. However, it's important to ensure that the receipts are organised and kept in good condition to avoid loss or damage and to comply with relevant laws and regulations. Due to new receipt scanning software, keeping receipts in a shoe box has become less prevalent over time. 
  • Receipt Tracking Software: If you prefer a more streamlined approach, you can use receipt scanning software. Several digital options are available, with tools like Thriday, Dext and Receipt Bank proving popular. Thriday, for example, can automatically extract data from receipts, including fields for the date, amount, GST, and merchant, and store it online.   

Receipt tracking is becoming increasingly popular as more businesses move towards automated accounting. Regardless of the method you choose, make sure to keep receipts organised and easily accessible. It's also a good idea to separate personal and business bank accounts to make tracking and claiming deductions easier. 

The next section will discuss the benefits of using automated accounting software for receipt tracking. 

 

 

Automated Accounting and Receipt Tracking 

Automated accounting software can make receipt tracking and bookkeeping easier for tradies. Here are some benefits of using an automated accounting software: 

Save Time 

Automated accounting software like Thriday can save time by eliminating manual data entry. Instead of manually entering data from receipts, the software can extract data automatically using image recognition technology. This saves time and reduces the risk of data entry errors. To find out how much time you could save with Thriday, take the time saver quiz.

Improved accuracy 

Automated accounting software can improve the accuracy of your bookkeeping by reducing the risk of human error. Receipt tracking software can automatically categorise expenses and reconcile them with your bank statements, making tracking and analysing your finances more manageable.   

Easy access to financial data 

Automated accounting software provides easy access to financial data, including receipts and invoices. You can store all your financial data securely in one place and access it from anywhere, making it easier to track your expenses and income. 

Overall, using automated accounting software can help you streamline your bookkeeping and simplify your tax preparation process. 

Thriday's all-in-one financial management platform

 

Thriday automates receipt and GST tracking 

Thriday is a user-friendly and affordable accounting software that can help tradies keep receipts and track GST in several ways: 

  • Integrated Receipt Scanning: Thriday offers a digital receipt tracking feature that allows you to capture and store receipts electronically. You can take a picture, upload, or forward your receipts to have them automatically reconciled to your expenses. Thriday's OCR technology can then extract the relevant data automatically, making it easier to categorise expenses and track GST
  • Automated GST Tracking: Thriday can automatically track GST for you, making it easier to accurately calculate and report your GST liability. The software can automatically categorise expenses as taxable or non-taxable and apply the appropriate GST rate.  
  • Receipt Reconciliation: Thriday can automatically reconcile your receipts to your bank transactions, making it easier to detect discrepancies and errors. This can save you time and reduce the risk of data entry errors. This also makes it easier for you to search and find receipts in future, as you can search for them in the platform. 

Thriday is a comprehensive accounting software that can help tradies keep receipts and track GST accurately and efficiently. By using Thriday, you can streamline your bookkeeping and tax preparation process, giving you more time to focus on growing your business. 

Receipt FAQs

Why are business receipts important?

Business receipts are important for keeping track of financial transactions and expenses for tax and accounting purposes. They provide proof of payment and help to record and report income and expenses accurately.

What information should be included on a business receipt?

A business receipt should include the name of the business, the date of the transaction, the amount paid, a description of the item or service purchased, and the method of payment. Additional information, such as the name and contact information of the vendor, may also be included.

Do I need to keep physical copies of business receipts?

Keeping digital copies of business receipts is recommended as they provide tangible proof of payment, easy to retrieve and are secure to store. Physical copies of receipts can also be kept as long as they are easily accessible and can be provided upon request.

How long should I keep my business receipts?

The length of time you should keep your business receipts is five years in Australia. With Thriday, your receipts can be uploaded or forwarded instantly, and receipts are held in the cloud for the required duration.

Can I claim expenses on my tax return without receipts?

It is best practice to record all expenses and receipts to accurately track and report expenses on your tax return. Without receipts, it may be challenging to prove expenses in the event of an audit. With

  

There is no way around it. Keeping receipts is essential for tradies to organise their finances, reduce tax liability, claim deductions, and avoid audit issues. Whether you choose to use receipt books, shoe boxes, or automated accounting software like Thriday, it's essential to keep receipts organised and easily accessible. Join Thriday for free today to simplify your bookkeeping and streamline your tax preparation process. 

DISCLAIMER: Team Thrive Pty Ltd ABN 15 637 676 496 (Thriday) is an authorised representative (No.1297601) of Regional Australia Bank ABN 21 087 650 360  AFSL 241167 (Regional Australia Bank).  Regional Australia Bank is the issuer of the transaction account and debit card available through Thriday. Any information provided by Thriday is general in nature and does not take into account your personal situation. You should consider whether Thriday is appropriate for you.

Why waste time on financial admin when Thriday can do it for you?

JOIN FOR FREE
Already have an account? Login here
Thriday Debit Card

SEE HOW THRIDAY HELPS
SMALL BUSINESSES

Live demo this Thursday at 12:30pm.
SAVE YOUR SPOT
Close