Top tips to keep in mind while keeping financial records for your business
Posted: 7 Mar , 2017Finance
Keeping accurate and complete records of your business activities will help you meet your legal obligations to employees, other businesses, and the Australian Tax Office.
There is no one right method of record keeping. Consulting with your financial advisers and accessing the Australian Tax Office's website can help you set up a manageable system that suits your unique operations.
When setting up your record-keeping system, consider the following questions.
- In your operation, what is a business transaction?
- Why and in how much detail, do you need to keep business records?
- Should you keep manual or electronic records?
- How will you keep your cash flow transactions easy to manage?
- What will your accountant expect to see?
- What records relating to taxation and superannuation do you need to keep?
- What records do you need to keep relating to employees?
- What records do you need to keep relating to banking and loan repayments?
- How will you securely file your records for the next five years for future reference?
For taxation purposes, you are expected to keep records that can explain all of your business transactions. These records include:
- sales and expense invoices and receipts
- cash register tapes
- credit card statements
- bank-deposit books and cheque butts
- bank-account statements
- employee payments and entitlements
- business purchases used for private purposes, showing how you calculated any private-use component.
An efficient record keeping system will give you peace of mind and confidence in your business dealings. It will also help you to:
- prepare tax-activity statements and returns
- keep on top of cash flow issues
- monitor your financial health so you can make good financial decisions
- demonstrate your viability to potential buyers or investors
- use your financial adviser wisely.
If you don't have the necessary skills and experience in bookkeeping, paying a professional to maintain your financial records is wise business practice. You can also learn bookkeeping skills through courses available through a number of institutions.
This content was first published on business.tas.gov.au