Your Record Keeping Requirements

Requirement by law

It is necessary that you have a record keeping system in your business as it is required by law.  The ATO necessitates the keeping of business records:

  • for five years after they are prepared, obtained or the transactions completed (whichever occurs later); and
  • in English, or in a form that the ATO can access and understand in order to determine your tax liability.

BONUS: Click here to download your FREE copy of our Ready, Set Business! Guide that shows you step by step how to start your own profitable business.

As stated on the ATO website, you should “keep records for a longer period if you use information from those records in a later tax return (for example, claiming a loss carried forward from a business activity in an earlier year).

Download Your Guide The records should be kept until the end of any period of review for that later return.  Records relating to assets for capital gains tax purposes may also need to be kept for a longer period.

If you already have an established record keeping system, it would be easier to update your records daily. Issuance and storage of your records may be done in either electronic or in paper form. If you have any questions, you may ask advice from your accountant.

According to the ATO, there are penalties for not maintaining your business records for five years. Therefore, you should keep your records to avoid unnecessary penalties and expenses.

Other reasons to keep your business records

These are some other reasons which are cited on the ATO website:

  • Accomplishing your business activity statements and making ready of your annual income tax and fringe benefits tax returns is easier.
  • Instead of paying your accountant or tax adviser for bookkeeping or financial statements’ preparation, you may provide them with well-organised records and pay them instead for growth and tax planning advice.
  • Regular review of how your business is doing helps you in making good business decisions as you will be able to see cash inflows and outflows.
  • Well-kept records will demonstrate the basis for any amendments you need to make to activity statements or tax returns you have already submitted.
  • Your financial position will be shown to creditors and potential buyers of your business through good business records.

Next Step

  • Choose on using either the electronic or paper form or both for you record-keeping and decide on your record keeping system.
  • Read the Record Keeping for Small Businesses guide available on the ATO’s website.

And don’t forget to grab your FREE copy of our Ready, Set Business! Guide that shows you step by step how to start your own profitable business. Get it here….

NOTE: This month we’re holding a limited number of Free Business Strategy Sessions designed to show business owners how they can manage and grow their enterprises with the least amount of cost and disruption possible.

Would you like to join us?

If you’d like to schedule one of these Free and obligation free sessions, let us know by email by using this contact form or call 07 3668 0646 and we’ll set things up for you.

James HuyVuong is a CPA and the owner of Your Accounting Partners. Partnering with businesses from start to scale thru to sale.

Posted on 15/03/2017 in Accounting Services

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About the Author

James Huy Vuong the Founder of Your Accounting Partners, a Brisbane based Business support agency. Specialising in providing bookkeeping, accounting, tax and compliance, business valuation and business sales services to local small business owners. His passion for business was evident very early on at the start of his career in accounting. He embarked on an unconventional path away from the traditional position with one of the big 4 accounting firms like most aspiring young graduate in his field. He decided instead through the lure a more diverse role, more pay and a much cooler title to work with Australia largest telco as a Business Specialist. He entered the world of business management and ownership in the hospitality industry for the invaluable hands-on experience one could not get just by reading textbooks, understanding debits and credits and passing exams. Huy has also spent a good part of a decade in the financial services industry owning and managing his family business which has lead him to start Your Accounting Partners. Your Accounting Partners sets out to help time-poor, frustrated business owners do better business by partnering with business owners on their ownership journey and making it together. Your Accounting Partners specialises in hospitality, service-base & professional services businesses. His mission is to help business owners use their business to give back to the family what it takes out. When it comes to business we say "You focus on what you do best, partnering with us and we'll take care of the rest".
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