Good business records include all the information you need to:
- know if your business is profitable
- calculate how much cash you need to pay your bills on time
- meet your tax reporting and other compliance obligations.
Accurate and complete records will also help you if the ATO ever asks you about the information you reported in your income tax return.
5 rules for good record keeping
These rules will help you keep good records:
- Keep all relevant tax and super records related to starting, running, changing, selling or closing your business.
- Store records safely to prevent damage and protect information from being changed (you must not change relevant information in records).
- Keep most records for 5 years; however, there are some situations where you need to keep your records for longer than 5 years.
- Be able to show the ATO your records if they ask for them.
- Ensure your records are in English or easily converted to English.
Digital record keeping
In addition to securely storing hard copies of your records, you can also keep digital copies. Just make sure:
- you keep copies of all tax invoices issued from your suppliers
- the tax invoices your suppliers give you are valid.
If amounts have been withheld from payments to your business, ensure your payer has given you a valid payment summary.
Another helpful tool to use for storing your receipts if you’re a sole trader, is the myDeductions tool in the ATO app. This can help you capture your expenses on the go.
If your tax records are damaged, destroyed or lost, the ATO may be able to help you reconstruct them.
Rate your record keeping
If you’re not sure how your business ranks with record keeping, you can check by using our record keeping evaluation tool. This helpful tool takes 5 to 10 minutes to use and will let you know how well you’re keeping records.
Find out more at ato.gov.au/keepinggoodrecords.
Source: ATO Newsroom
