Many small businesses, particularly sole traders and partnerships, see the owners often pay small expenses out of their own pocket.
It can be quite difficult and cumbersome to keep track of these expenses, and more often than not they are forgotten…and that’s not good! Forgetting these expenses means a business may be forgoing a claim of GST input tax credits as well as a valid income tax deduction, not to mention the financial cost to the owner who paid the amount!
With Xero, recording and reimbursing these expenses is so easy.
Expenses can be recorded into Xero by creating an expense claim and at any time you can record a reimbursement of the amount by way of a cash payment or a capital contribution.
As a sole trader, most of the time I choose to record the amount as a capital contribution, but using the reimbursement function can provide a more equitable outcome when the trading structure is a partnership or company.
An added bonus is that the receipt for the expense can be sent to your Xero inbox and attached to the transaction – all avoiding the need to keep those pesky little pieces of paper (you’ll find out more about this in a later blog post…but it’s pretty cool!)
To find out how easy Xero is to use, just Contact me!