It’s never too late to start a good record keeping system for your business. It’s an important part of being a small business owner and will help you to ensure you’re meeting your tax obligations.
Benefits of record keeping
While it can be tedious, there are many benefits to keeping good records.
It can help you to:
- keep track of your business’ health, so you’re able to make sound business decisions
- prepare your tax return more easily
- manage your cash flow
- demonstrate your financial position to banks or other lenders.
The legal requirements for keeping business records
By law you must keep business records:
- for a minimum of five years or longer after the record is created, updated or the transaction is completed (whichever is most recent)
- in English or in a form the Australian Taxation Office (ATO) can understand.
Storing records electronically
You’re able to store your records electronically, but you must make sure they are:
- a true and clear copy of the original
- kept for five years
- able to be reviewed by the ATO at any time.
The records must also be on a computer or device that:
- you have access to (including all passwords)
- is backed up in case of computer failure
- allows you to control the information that is processed, entered and sent.
The tax records you have to keep
You will need to keep records to help you prepare your business activity statement (BAS), and annual income tax return. Depending on your tax obligations you may need to keep other records as well.
Here’s a list of some of the tax records that small business owners have to keep:
- income tax and GST
- sales records
- purchase/expense records
- year-end income tax records
- banking records
- payments to employees and contractors
- PAYG withholding for business payments
- fuel tax credits.
What to do: