How to keep accurate business records
Good records are what make everything else easy: an accurate BAS, a tax return without a scramble, a loan application that goes through, and numbers you can actually run the business with. They’re also a legal requirement.
What the law expects
The ATO requires every business to keep records that explain all transactions relating to tax and super. Each record should show the date, the amount, who it was with, what it was for, and the GST.
Poor records can mean claims are disallowed, penalties are applied, or the ATO estimates your income for you. They can even lead to the ATO requiring you to complete a record-keeping course.
How long to keep them
- Most records: five years from when you prepared or obtained them, or completed the transaction, whichever is later.
- Assets you’ll sell later (property, shares, business assets): five years after the sale, because you need the purchase and improvement records to work out the capital gain.
- Companies: seven years for financial records under the Corporations Act.
- If your return is amended or under review: until the review period ends.
What to keep
Income: sales invoices, receipts, bank deposits, merchant statements and records of cash takings.
Expenses: supplier invoices and receipts, bank and credit card statements, and for anything used partly privately (car, phone, home office), how you worked out the business share.
Vehicles: a logbook if you claim the business share of actual car costs. A valid logbook covers 12 continuous weeks and lasts five years if your use doesn’t change much.
Staff: payroll, super payments, STP reports, timesheets, tax file number declarations and employment contracts.
Assets: purchase invoices, depreciation schedules, and sale details.
GST: tax invoices for purchases over $82.50 (including GST) before you claim the GST credit.
Digital records are the easy way
The ATO accepts digital records, and they’re far easier to keep than shoeboxes of paper. A sound setup looks like this:
- A separate business bank account and card. Mixing business and personal spending is the single biggest cause of messy books.
- Bank feeds into Xero, MYOB or QuickBooks, so every transaction arrives automatically.
- Receipt capture. Snap the receipt or forward the email, and the image is attached to the transaction. No paper to keep.
- Cloud backup and sensible access controls, so you’re not one lost laptop away from losing everything.
A weekly routine that works
- Reconcile the bank feed: match every transaction and code anything new.
- Attach receipts to anything that doesn’t already have one.
- Send invoices for work done and follow up anything overdue.
- Move GST, PAYG withholding and a tax provision into a separate account.
Half an hour a week beats three days in June. If even half an hour isn’t realistic, our bookkeeping does it for you every week from $90 + GST, and we’re a Xero Platinum Partner if you need the software set up properly first.
Records are worth more than compliance
Up-to-date books let you see which jobs make money, spot cash flow problems early, support a loan application, and plan your tax before 30 June rather than after it. They also make your business far easier to sell one day. Getting them right is one of the cheapest ways to make better decisions.