Record Keeping is an essential part of running a business in Australia. Keeping accurate and complete records will help you manage your business and its cash flow. But did you know you also have a legal obligation to the ATO to keep certain records for a specific amount of time?
So, what records? For how long? And just how can you store them?
What records do you need to keep:
You must keep detailed records for all transactions related to your Tax and Superannuation.
- Receipts and other evidence of all sales and purchases you made for your business
- Tax invoices, wage & salary records
- All documents about GST
Records of the purchase, sale, and other costs of any business assets, such as land, buildings, or office equipment
- All records relating to tax returns, activity statements, fringe benefits tax, and contributions to employee superannuation.
Your records should include information such as the date and amount of the transaction and the character of the transaction, for example, was it a sale, purchase, rental, or wages. The relevant Tax like GST or PAYG should also be included.
For how long you need to keep your records:
In general, you need to keep most records for 5years. This period should start from when you prepared or obtained the record or completed the transaction or acts they relate to.
There are some records that should be kept for longer than 5years, for example, if your business owns capital assets that are subject to capital gains tax. Pacific Accounting can help you with the full list of exceptions.
How to store your records:
You need to be able to show the ATO your records if they are requested, so make sure you store your records in a secure place. Your records must be in English, or able to be easily converted to English.
If you are storing your data electronically you must:
Provide passwords, encryption keys and information about how to access the data when asked.
- Ensure data and records are identifiable, labelled or indexed
- Ensure your data is backed up in case of computer failure
At Pacific Accounting, we recommend and use of cloud based financial software to assist in your recording keeping. We use Xero for our client. This, along with other integrated software like your POS, Payroll Apps and Invoice Importing software can cover most of what is required of you.
For more information visit the Australian Taxation Office website or contact us at Pacific Accounting on 1800 1800 98