What your accountant actually needs at tax time

The short checklist

For most sole traders and freelancers the handover comes down to five things: a complete record of income, a categorised list of expenses, receipts substantiating the larger or less obvious ones, details of any assets bought or sold during the year, and last year’s return as a reference point.

What separates a smooth handover from a slow one is rarely a missing item. It is usually that the expenses arrive uncategorised, so the first thing your accountant does is work that you could have had done automatically.

Three items are worth adding once your business is past its first year. Statements for every account and card the business touched, including any account you have since closed, because a closed account is the one nobody remembers. Your activity statements for the year if you are registered for GST, so the return and the statements you already lodged can be reconciled against each other. And a short note of anything unusual that happened — a new loan, a business asset sold, a client who never paid, a move between states or countries.

Why categorisation is the bottleneck

A raw bank export is a list of merchants and amounts. Turning that into a return means deciding, line by line, which entries are business, which are personal, and which are claimable — and your accountant has to ask you about anything ambiguous.

Every one of those questions is faster to answer in the moment than eleven months later. Categorising as transactions arrive means the ambiguities get resolved while the context is still fresh, and your accountant receives decisions rather than questions.

The cost of leaving it is not only time billed. An expense your accountant cannot resolve is usually left out, because a claim nobody can explain is a claim nobody should make — so an uncategorised year is quietly a smaller return as well as a slower one. The categories that most often go missing this way are the ordinary-for-your-trade ones an outsider would query, which is exactly what the sole trader deduction guide is written to pre-empt.

Substantiation: attach, do not append

Receipts sent as a separate folder create reconciliation work — someone has to match each one to a line. Receipts already attached to their transactions arrive pre-reconciled, and the gaps are visible at a glance.

This matters most for the expenses an accountant is likely to query: larger one-off purchases, anything with a mixed business and private use, and merchants whose name gives no clue about what was bought.

It is worth being explicit about what substantiation is for here. Your accountant is not collecting paperwork for its own sake; they are deciding whether a claim can be defended if it is ever examined, and that decision is theirs to make on evidence rather than on your recollection. Handing over the evidence with the expense lets them make it once. Handing over the expense alone makes it a question, and questions come back to you in the week you have least room for them. The capture habits that make this painless are in organising receipts for tax time.

The four things accountants chase most

Assets. Anything bought that will last beyond the year needs its date, cost, and the business-use share, because it goes on a depreciation schedule rather than into expenses. Assets sold or scrapped matter just as much and are almost never volunteered — a disposal changes the schedule and can create a balancing adjustment. Keeping the entry attached to the transaction that bought it, in an asset register, makes this a lookup instead of an archaeology exercise.

Private use. For every mixed expense — a car, a phone, a room, a laptop — your accountant needs the percentage and the basis you worked it out on. "About half" is not a basis. A logbook period, a four-week phone sample or a floor-area calculation is, and it takes one sentence to record.

Money that is not income. Loans into the business, capital you contributed, and drawings you took out all move through the same bank account as revenue and none of them are revenue. Left unlabelled they inflate your turnover and understate your accuracy, and they are the single most common cause of a figure that does not match the year you remember.

Year-end positions. Invoices issued and unpaid at year end, bills received and unpaid, stock on hand, and the closing balance of every account. These decide which year several figures belong in, and they cannot be reconstructed later because they describe a single moment that has passed.

Hand over once, not in instalments

The slowest handovers are the ones that happen in pieces — an export, then a follow-up email of receipts, then a correction. A single tax-ready export containing categorised transactions, a deduction summary, a GST breakdown where relevant and the attached receipts collapses that into one exchange.

It also makes the year auditable in the ordinary sense: if a figure is ever questioned, the record supporting it is already sitting beside it rather than needing to be reassembled. This is general information, not personal tax advice — check what applies to you with your accountant or the relevant tax authority.

One practical detail decides how well this lands: ask first, then export. Practices differ on the format they want, the level of detail, whether they want the whole year or the ledger they already hold topped up, and whether they would rather receive a file or be given access to a living one. A five-minute question in May prevents the most common failure, which is a beautifully prepared export in a shape nobody can use.

After the return: what to keep and what to ask

Keep the lodged return, the workpapers behind it, and the records supporting every figure, for the retention period your authority sets — and keep asset records for as long as the asset is on the schedule, which is usually longer. The end of a return is the right moment to file all of that, because it is the only moment the whole year is in one place.

Ask two questions before you leave. First: what would you like to receive differently next year? Accountants almost always have a specific answer and are almost never asked, and the answer usually removes a whole class of back-and-forth from the next cycle. Second: is there anything I should be doing during the year rather than at the end of it — an instalment, a reserve, a registration, an election with a deadline?

It is also reasonable to check that whoever prepares or lodges your return is registered to do so. In Australia the Tax Practitioners Board maintains a public register of tax agents and BAS agents; most countries have an equivalent. AI2Fin is not a registered tax or BAS agent and does not lodge anything on your behalf — it gets the year ready so the person who does can start on the work you are actually paying for. This is general information, not personal tax advice — check what applies to you with your accountant or the relevant tax authority.