Most people associate record keeping with tax time, but having a good record keeping system in place can also help you monitor the health of your business.
Record keeping can give you a more accurate picture of your business to help you understand how you are doing and so you can spot any potential problems sooner rather than later.
The types of records you should be keeping include:
- all income (including cash, EFTPOS, credit or debit card, online sales and other payments you may receive)
- expenses (such as operating expenses, business travel expenses, and payments you make to employees and contractors including any cash wages)
- bank statements
- records of business purchases or use of business stock for personal purposes (to help you work out the business portion to claim as a deduction, and to account for the stock used).
Good record keeping doesn’t have to be hard; the key is to find a system that works for you. Here are some tips to make keeping records easy:
- save records electronically (if possible)
- keep evidence of all transactions
- take pictures of your receipts to avoid faded records
- retain all business records including income, expenses and bank records
- keep your business records separate to your personal records.
Remember, without proper records you may not be able to claim everything that you’re entitled to come tax time.
Useful record keeping tools
If you’re a sole trader with simple tax affairs, you can use the ATO’s myDeductions tool to track your income and deductions throughout the year.
The ATO’s record keeping evaluation tool can help you review your record keeping practices and see if you’re still on the right track.
For more tips on record keeping, visit the ATO website.
To learn more about keeping track of your business’s financial health, attend our Understanding Business Financials workshop.