Benefits of record keeping
A common question we are asked by clients is….. How long do I need to keep my records for?
While we have the mindset that we just need to keep records to satisfy ATO audit periods, there are many other reasons why keeping good records is important and beneficial to you. It is time to start thinking of record keeping as more than just satisfying a document retention period.
Good record keeping can help you to find the information you need. It promotes the creation of full and accurate records in the first place. It also involves storing and managing records appropriately so that the information will be available to you when you need it. While it can be tedious, there are many benefits to keeping good records.
It can help you to:
- keep track of your business’ health, so you are able to make sound business decisions,
- simplify tax return preparation,
- manage your cashflow, and
- demonstrate your financial position to banks or other lenders.
The legal requirements for keeping business records
By law you must keep business records:
- for a minimum of five years or longer after the record is created, updated or the transaction is completed (whichever is most recent)
- in English or in a form the Australian Taxation Office (ATO) can understand.
Storing records electronically
Records can be stored electronically, but you must make sure they are:
- a true and clear copy of the original
- kept for five years
- able to be reviewed by the ATO at any time.
The records must also be on a computer or device that:
- you have access to (including all passwords)
- is backed up in case of computer failure
- allows you to control the information that is processed, entered and sent.
The tax records you have to keep
You will need to keep records to help you prepare your Business Activity Statement (BAS), and annual Income Tax Return. Depending on your tax obligations you may need to keep other records as well.
Now in the ever evolving age of technology, many accounting software packages are implementing document storage within and can be a great way of reducing paper storage and also assisting with being able to easily access archived documents years down the track.
If you feel that you are snowed under by a mountain of records/documents and wish to explore new ways of record keeping, it is time to have a chat to one of our experienced team.