Record-keeping requirements for your business

It is important that all business owners keep accurate and complete records.

You must keep detailed records for all transactions related to your tax and superannuation affairs as you start, run, sell, change or close your business.

Accurate and complete records help you:

keep track of your income and stock levels
know what expenses you’ve incurred
make informed business decisions
prepare for your business activity statements and tax returns.

Keeping accurate and complete records for all your business transactions will not only help you manage your business and its cash flow, but will also avoid penalties that may apply and reduce the possibility of the ATO denying your expense claims.

Record-keeping tips

Here are some tips to help you avoid common record keeping errors.

Keep accurate records of all cash and electronic transactions.
Reconcile cash and EFTPOS sales regularly.
Check for mistakes if things don’t add up.
For expenses that are for both business and private use, work out and record the business portion accurately.
If you have used trading stock for private purposes, remember to account for the stock as if you’ve sold it and include the value in your business’s assessable income.
Ensure you have sufficient records to substantiate business expenses claimed as tax deductions.
Don’t use estimates to prepare your tax returns and business activity statements (BAS). Ensure you have complete and accurate records to substantiate the information you include in them.
Be accurate in how you use your source records to work out the amount you claim for the research and development tax offset (if it’s applicable to your business).
Keep records for 5 years – from when you prepared or obtained the record, or completed the transaction or related acts, whichever is later. You should also keep records long enough to cover the end of the period of review.
Keep accurate and detailed records if you are paying contractors to provide certain services on your behalf to help you complete your taxable payments annual report (TPAR).
If you are claiming GST credits, set aside your GST in a separate ledger account to make your record keeping and calculations easier.
If you had PAYG amounts withheld from payments to your business, ensure your payer gives you a PAYG payment summary. You may need it to substantiate any PAYG credits you later claim in your tax return.

Handy record-keeping tools and guides

To help you determine how well you are currently keeping your business records, the ATO has a handy record-keeping evaluation tool. Check it out here.

You can also get across what records you need to keep based on the size, structure and nature of your business, your situation and the stage your business is in by reviewing the ATO guides on this link.

Need help with record keeping for your small business?

If you aren’t sure whether you have the correct record-keeping processes in place for your small or family business, or even where to start, Balanced Beans can help.

As a a registered tax and BAS agent we can assist you to meet your requirements or get you back on track if your record-keeping has derailed!