Coding invoices and bank transactions for GST purposes is essential because it allows you to accurately separate and track business expenses that qualify for GST claims from those that don’t. You can also use the coding to categorise your expenses to manage and monitor your budget and understand where your money is going. Here’s why it matters:

1. Accurate GST Claims: Coding helps ensure you only claim GST on eligible expenses. Some expenses, like personal or entertainment-related costs, may be partially or fully non-deductible. By coding them correctly, you avoid overclaiming GST, which could lead to issues with tax compliance.

2. Efficient GST Returns: When transactions are coded accurately, GST reporting becomes straightforward and quicker. It helps you streamline your GST return preparation, ensuring each expense is correctly categorized, so you only submit what’s necessary.

3. Financial Insights: Coding provides a clear picture of where your business money is going, especially when it comes to deductible versus non-deductible costs. This visibility supports better budgeting and planning.

4. Compliance with Tax Requirements: The tax authorities require that GST returns be accurate and fully compliant. Properly coded transactions reduce the risk of errors, audits, and penalties.

In short, coding is about keeping your financials transparent and compliant, while saving you time and hassle at GST reporting time.