Understanding cash basis reporting for Sole Traders
As a sole trader, you report on a cash basis. This means you're only obligated to pay GST and income tax on payments you actually receive. In TaxTank, this principle is applied to ensure your financial reporting is accurate and compliant.
When are invoices reflected in TaxTank?
In TaxTank, invoices are marked as pending until they are fully or partially paid. This means an unpaid invoice will be excluded from the BAS Report, Tax Summary, and Business Schedules. This method ensures that only actual payments received are included in your tax position and reports, so you’re not paying taxes or GST before receiving payment. This approach aligns with the cash basis reporting method, providing an accurate and realistic view of your financial situation.
How to ensure your invoices are accurately reported
In TaxTank, we automatically allocate invoices when a payment is received in your bank feeds for the related bank account and with the correct invoice number. However, if this feature is disabled or there is no related bank transaction, follow these steps to ensure paid invoices are included in your reports:
Match Invoices from Bank Feeds:
Utilise the 'Find & Match' reconciliation feature to match your invoices with corresponding bank transactions. This ensures that once payment is received, your invoice is marked as paid (or partially paid) and included in your reports.
Manual Payment Allocation:
If there is no related bank transaction, manually allocate the payment directly from the invoice tab by selecting the payment date and amount in TaxTank. This allows you to ensure the payment is accurately recorded in the correct reporting period.