Running a business takes time and passion. From day-to-day operations to bookkeeping, marketing and human resources too, keeping up with the diverse workload of a business requires an unrelenting commitment. As a business owner, you face a number of demands and requirements, including the responsibility of keeping records. The Australian Taxation Office (ATO) requires you to keep accurate and correct records on the income your business receives as well as the expenses that are connected with that income.
There are however other benefits of good record keeping. In addition to it being a requirement, it can help you to monitor your business health, analyse your cash flow and demonstrate your financial position to lenders and suppliers.
Read through our basics of business record keeping below for some quick tips:
What to keep
Some of the basic records you need to keep include:
- Governing documents (e.g. constitution, rules, trust deed);
- Financial reports (e.g. financial statements, annual budgets, reconciliations, audit reports, accounts payable and accounts receivable);
- Cash book records of daily receipts (income) and payments;
- Tax invoices and income tax records, such as debtors and creditors lists, stock-take records and motor vehicle expenses;
- Records relating to employees [e.g. TFN declarations, pay as you go (PAYG) withholding, superannuation and fringe benefits];
- Records of payments withheld from suppliers who do not quote an Australian Business Number (ABN);
- Banking records (e.g. bank statements, deposit books, cheque books, bank reconciliations);
- Grant documentation (e.g. when funding will be received, when acquittals need to be made, application deadlines);
- Registration, certificates and accompanying documents to regulators [e.g. ATO, Australian Charities and Not-for-profits Commission, and state regulators];
- Contracts and agreements (e.g. cleaning, maintenance and insurance contracts, finance or lease agreements);
- Copies of reviews of entitlement to tax concessions; and
- Records to help prepare tax statements and returns.
Under taxation law, your records must:
- Explain all transactions;
- Be in writing;
- Be in English; and
- Be kept for five years (although some records need to be kept longer).
To help make record keeping easier, you can utilise the built-in functionality of your accounting software package to track most of the information you need to keep. However, it is also a good idea to create a separate file to store certain information such as contracts and lease agreements, employee documentation, insurances, and licences and registrations.
Need help? If you have questions about keeping your business records, want to know how to maximise the use of your accounting software or if you need personalised business advice about systems and processes, contact us to book an appointment with one of our advisors.