Golden rules for good record keeping

Keeping accurate and complete records is good practice, because it will enable you to manage your business and cash flow and will help you to run your business more efficiently. You will be able to monitor the health of your business, make sound business decisions and demonstrate your financial position to lenders.

The following five rules are essential requirements for good record keeping practice:

1. Keep all records which are relevant to your business’ tax and super affairs. If your expenses relate to business use and personal use, make sure you have clear documentations to show the business portion.
   
   ​Records might include:
   - BPAY or PayPal records
   - Tax invoices for purchases over $82.50
   - Stocktake records
   - Lists of creditors and debtors
   - Records of wages (including director’ fees)
   - Super guarantee contributions paid to each employee and how these have been calculated
    
2. You must store records safely so that they do not get changed or damaged
    
3. Records must be kept for five years
    
4. You must be able to get your hands on your records if the ATO request to see them
    
5. They must be in English (or easily converted into English)

If you store your records digitally, ensure you back up records using cloud storage to keep your records safe from flood, fire or theft. If the ATO request to see copies of records you keep digitally, you can provide either digital or printed copies. They may also request documentation from your computer about your record-keeping system – which includes your back-up and record destruction procedures.

The ATO offers a useful record keeping evaluation tool. This will help if you are currently running a business but will also be useful if you are thinking of starting a business, as it will help you to understand your obligations.

Call in at your local TaxAssist Accountants and we can advise on record keeping and software, to ensure you meet all of your tax, super and employer obligations.

Date published 26 Feb 2021 | Last updated 26 Feb 2021

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.