Record-Keeping Rules for Small and Large Businesses in Australia

Businesses have to multi-task every single day. From producing goods or services to their marketing and maintenance, there is a long list of never-ending tasks that needs your attention daily. One very important among all such studies is the act of recording all your transactions.

Record keeping is helpful for your business and must be legally done for all companies in Australia. The Australian Taxation Office and the Australian Securities and Investment Commission mandate that businesses keep and produce records when needed.

As a business owner, you might need clarification on what data has to be recorded and how. With the sheer complexity of invoices, receipts, and other daily data, you may need to store relevant information that may come in handy during auditing. An experienced bookkeeper can help you stay on top of your record-keeping task.

Here are the top four record-keeping rules that small and large businesses in Australia can follow to meet the government’s record-keeping obligations and grow their business systematically without financial repercussions.

Keep a Systematic Record of All Business Transactions

From the time that you start your business till the time that you close your business, each financial transaction needs to be recorded and stored for the perusal of the Australian Taxation Office.

Make sure you have all documents to distinguish expenses made for your business use from those you make for your personal use. This also includes all expenses and profits made while running, changing, or selling the business. Resist the urge to use company credit cards for personal purchases. It could produce unnecessary hassle while paying taxes.

An experienced bookkeeping agency can help sort out all your expenses systematically using bookkeeping software. They can help you sort out client files, purchase orders, contracts, and employment applications, so you have records of every possible transaction that the Tax Office may ask you to produce.

Never Change the Relevant Data in Your Records

It is illegal for companies to use electronic sales suppression tools (ESSTs) to change their financial information and under-report their income. An ESST is an electronic program that can deliberately change the sales records of a business digitally. This leads to sales and income being under-reported, leading to less tax.

Ensure you retain accurate data to meet your tax, super, and employer obligations. If your recording-keeping system changes over time, you need proper security to reconstruct your original data.

The Australian Taxation Office can ask you to showcase the appropriate safeguards you have in place if your original data is damaged. Your business must also have proper security that protects any relevant financial information from getting out or getting changed.

You must keep your records for five years.

The Australian Tax Office stipulates that most of your records must be retained for at least five years and be produced before the authorities when asked. However, the period for keeping records can be more than five years for some documents.

This five-year period for each record starts from when you first prepared the data for the record or completed the transaction this record talks about (whichever is later). If you have any routine procedure for destroying the unnecessary digital data of the company, you also need to store the information regarding it.

For about seven years, one must systematically store purchase, lease records, brokerage statements, and other sales-related data. Employment records like payslips, hours worked, superannuation payments, and leave records are also mandated to be stored for about seven years.

An expert bookkeeper can help you understand which record needs to be kept for what duration. They will store your information based on the laws of the Australian Tax Office and the Australian Securities and Investment Commission. Make sure you speak to your bookkeepers about the duration they store your data.

Your Business Records Must be Ready When Asked

The Australian Tax Office and other government entities can ask you to produce your financial information to them at any time. Make sure you have it handy and updated, so there is no last-minute tension on your part.

Using digital record-keeping software ensures that your records are updated regularly and available anytime, and everywhere you go. All records in Australia must be in the English language.

To Sum It Up

Accurate and complete records help you score brownie points with the legal entities but also help you grow ad make sound business decisions. It helps make the audit process easier and shorter for your business.