Business records are a requirement to meet tax, super and employer obligations. As a business owner, it is essential you understand what records are needed for your business and ensure these records are accurate and up to date.
Keeping records is a requirement by law and the ATO (Australian Taxation Office), and any business that fails to comply with record keeping requirements, can face legal and financial consequences.
The ATO has five rules for record keeping for businesses including:
- Keep all records relevant to your tax and super affairs
- Protect your records
- Keep most records for 5 years
- Have records that are accessible if requested by the ATO
- Records must be in English
Keep all records relevant to your tax and super affairs
Business owners need to keep all records that relate to starting, running, changing and selling or closing a business that are relevant to your tax and super affairs. If your expenses include both personal and business expenses, it must be clearly documented what is the business portion.
Protect your records
All relevant information in records must be unchanged and stored in a way that protects the information from being altered or the record from being damaged. The ATO may ask you to show what appropriate safeguards your business has in place. If your record keeping system changes over time, you need to be able to reconstruct your original data.
Keep most records for 5 years
Generally, the five-year retention period for each record starts from when you prepared or obtained the record or completed the transactions or acts those records relate to, whichever is later. However, in some situations, the law states that the start of the five-year retention period is different and you need to keep some records longer. Refer to the ATO for full clarification on this rule.
Have records that are accessible if requested by the ATO
You must keep information about your record-keeping system so the ATO can check it meets the record-keeping requirements. Ensure the information in the record includes the relevant details to meet your tax, super and employer obligations.
If date and records are stored digitally, it’s essential to use an encryption system, use passwords to protect your records and ensure your data and records and identifiable, labelled or indexed as you store it.
Records must be in English
Records must be in English or be easily converted to English.
Click here for more information on the ATO’s Five Rules for record keeping.
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Bookkeeping Matters has fine-tuned the bookkeeping experience to be efficient, proactive, and valuable to small to medium sized businesses in Australia. Empowering businesses is what drives her to deliver this first-rate service for clients of any scale and industry.
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Reference: Overview of record-keeping rules for business
Disclaimer: The information in this article is general information only.