Record Keeping Obligations

Small businesses are required to keep records and documents for tax purposes in relation to their business operations.

keeping accurate and up-to-date financial records 

The main reasons for keeping accurate and up-to-date financial records are outlined below.

  1. Financial records provide information to allow you to monitor the performance of your business.
  2. It is a legal requirement. By law, the Australian Taxation Office (ATO) requires you to keep certain business records and penalties may apply if you do not comply.
  3. You are required to keep financial records for a minimum of five years after they are prepared, obtained or the transactions completed (whichever occurs later). 
  4. Your obligations to keep records for five years continue even if you sell, close, or retire from your business
  5. The records need to be in plain English and allow for ease of access should the tax office ever wish to see them.
  6. If you maintain good financial records, it will be easier and faster to complete your business activity statements and other tax obligations when they are due.

What records do I have to keep?

You are required to keep a range of business records for reporting to the ATO, including those listed below.

 

Records relating to income tax and GST, including:

  • Sales records : includes sales invoices or receipts, cash register tapes, credit card statements, bank deposit books and account statements;
  • Purchase/expense records: includes tax invoices, receipts, cheque butts, bank account and credit card statements; and
  • Year-end income tax records: includes motor vehicle expenses, list of debtors and creditors, stocktake sheets and depreciation schedules.

 

Records relating to payments to employees, including:

  • tax file number declarations;
  • worker payment records;
  • PAYG payment summaries;
  • superannuation records; and
  • FBT details.

 

PAYG withholding records relating to business payments, including:

  • records of amounts withheld from payments where no ABN was quoted,
  • copies of any PAYG withholding voluntary agreements,
  • PAYG payment summaries, and
  • annual reports.

 

Records relating to fuel tax credits, including:

 

  • records of fuel acquired, lost, sold or disposed of. Read more...

 

Record keeping assistance from the ATO

The Australian Taxation Office's Record Keeping Evaluation Tool is designed to help you find out which business records you need to keep, and to evaluate how well your business is meeting its record-keeping obligations.

They also provide various rates, calculators and tools for businesses, and their website has a whole section of information on record keeping for small business

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