Good records are the foundation of a good business, so it is a good idea to
have a suitable record keeping system ready to go from day one. You can
keep your records electronically or on paper.
Setting up electronic records when you start can save you time later when you
lodge your activity statements or prepare your tax return. They automatically
total amounts, allow you to print invoices and provide summary details for
your activity statements and tax returns.
A variety of electronic record keeping packages are available. Some software
allows you to lodge your activity statement and certain forms directly from
your software to the ATO. These are called Standard Business Reporting - or
SBR-enabled software. To lodge online, you will need an AUSkey. To find out
more about SBR, visit sbr.gov.au, or ato.gov.au/onlineservices
You’ll need to keep records of all your sales and expenses to prepare your activity
statements, annual tax returns and to meet other tax obligations. Generally, records
you need to keep include:
Income and sales records of all sales and barter transactions - for example,
invoices, receipt books, cash register tapes and records of cash sales.
You'll also need to keep records of all business expenses, including cash purchases.
Records could include receipts, invoices, cheque butts, credit card vouchers and
diaries to record petty cash expenses.
And you should keep all bank records, such as bank statements and loan
documents.
Other records you need to keep include details of what assets you buy and what
you spend on those assets. An asset register can help you keep track of these
expenses.
You'll also need to keep copies of contracts and franchise or other agreements.
As well as year-end records, including lists of creditors or debtors and worksheets
for depreciating assets.
For certain work, car and business travel expenses, it’s not always possible to get a
receipt. But you can still claim the expenses as deductions as long as you record
the details of these expenses in a diary or logbook.
The main GST records you need to keep are tax invoices and adjustment notes. If
you’re registered for GST, you need a tax invoice to claim GST credits included in
the price of any good or service you buy for your business that cost more tha n a
certain amount.
Any tax invoices you issue to your customers or receive from your suppliers must
contain certain information to be valid.
It must show the date the document is issued and it must contain the supplier's
name and ABN, as well as a brief description of what is sold, including the quantity
and the price of what is sold.
It must also show the extent to which each sale is a taxable sale - this can be
shown separately or as a statement such as 'total price includes GST'.
To work out your fuel tax credits and to support your claims, you need to keep
records showing the date you acquired the fuel, the quantity and type of fuel you
acquired and the business activity you used it in.
You should keep records from the start of your business activity so you are ready to
calculate and claim your fuel tax credits.
For employees, you need to keep records of wages, allowances and other
payments you made to them.
As well as superannuation guarantee records, including payments you made and
records that show you have met your choice of super fund obligations.
You also need to keep records of Fringe Benefits Tax calculations, worksheets,
declarations, elections and supporting details, as well as copies of TFN declarations
or withholding declarations.
You may have to keep logbooks, lease or loan documents or yearly odometer
readings for motor vehicles you use in your business.
I’ve got a good tip for you. I found a free record keeping evaluation tool on the
ATO’s website. It’s this great interactive software program that helps me
understand what records I need to keep and helps me decide whether my
record keeping needs improving or not.
It provides a list of records tailored specifically for my business, a report on
how well the business is keeping its records and suggested improvements
where appropriate.
And it’s completely anonymous; the ATO can’t access the information I enter
in the tool.
You must keep written records in English. If you keep electronic records on
your computer, they must be in a form that you can easily access and convert
into written English.
You must keep any account books, records or documents related to preparing
your tax return for at least five years after they are prepared, obtained or the
transaction is completed, whichever occurs last.