Effective and reliable record keeping is extremely important for small businesses.
Maintaining organised records will help you to meet your tax obligations and will be extremely helpful in the event that you get audited.
A good record keeping system can also help you to monitor and reflect on your cashflow, and can be a valuable tool when making business decisions.
Records must be kept in English or in a form that can be easily translated. While records may be kept on paper or electronically, it is advisable to lean towards electronic systems. Electronic record keeping systems can save you a significant amount of time and there is a far lower risk of losing track of important documents.
Small business owners are often surprised to discover that it is necessary to retain financial records for a full five years from when the tax return was lodged.
Furthermore, if you are involved in a dispute with the tax office then you may be required to retain records beyond the five year period.
Records that you must keep include
- income and sales records for the business. This may include cash register rolls, receipt books and records of all cash sales.
- Expense records for all purchases made by the business, including records of cash purchases.
- Records of any capital gains and/or losses
- GST records
- Bank records
- Information on employees and contractors including ABNs and TFNs.
