On top of running the business efficiently on a day to day basis, it’s also very important for small business owners to keep accurate and up to date records. These records are extremely useful come tax time and will assist you with knowing exactly where your money is going and coming from.
Why do we record keep?
- Record keeping is extremely useful in keeping track of your business’ health. From records you can easily see your financial position and identify if you are facing any problems that require attention such as late payments from vendors.
- It will also help you prepare for your tax return easily. Come tax time, getting everything together for your accountant can be a nightmare, especially if you haven’t been keeping your records properly. Your accountant will generally let you know what records and documents they will require from you so make sure you are aware of these and keep them organised. A good idea is to create a special file with documents (preferably hard copies) for your tax return. This way come tax time, it’s as easy as posting or dropping off your records to your accountant.
- Record keeping is also a great way to manage your cash flow. By keeping track of financial statements, you can see income and outgoing expenses. You can analyse when you are spending too much and when you need to cut back. Also, it’s a good way to keep track of who has paid you and who hasn’t. Hold onto all your receipts and invoices.
- Finally, it helps you demonstrate your financial position to banks or other lenders. If your business or you personally require a loan, one of the best ways to prove that you will be able to make repayments is by showing them your records. This allows them to see you have the capacity to make repayments and are a good candidate.
What are the requirements for keeping business records?
By law you must keep business records for five years after the record is created, updated or completed (whichever comes first) in English or in a form the ATO can understand.
You may keep electronic records but you must keep a clear and true copy of the original, keep it for five years and make it accessible so the ATO can view it at any time.
What records do you have to keep?
- Sales records.
- Income tax and GST.
- Purchase/expense records.
- Year-end income tax records.
- Payments to employees.
- PAYG withholding for business payments.
- Fuel tax credits.
For more information on any of the above, please don’t hesitate to get in touch with the team here at Fortis Accounting Partners. You can reach us on 02 9267 0108, or via info@exemplary-financial.flywheelsites.com.
