Make good record-keeping a habit this financial year!


Photo: Unsplash.com

Record keeping is a crucial part of any business. In addition to meeting your tax and superannuation obligations, having good records will give you a more accurate picture of your business to help you understand how you are doing, so you can spot potential problems sooner rather than later.

Keep accurate records of all business transactions to support your claims and make it easier for you (and for us as your tax agent). Without proper records you may not be able to claim what you’re entitled to.

You should definitely be keeping a record of:

  • all income (including cash, EFTPOS, credit or debit card, online sales and other payments you may receive)
  • expenses (such as operating expenses, business travel expenses, and payments you make to employees and contractors including any cash wages)
  • bank statements
  • records of business purchases or use of business stock for personal purposes (to help you work out the business portion to claim as a deduction, and to account for the stock used).

 
Good record keeping doesn’t have to be hard; find a system that works for you. Get it right from the beginning to avoid making mistakes, but if you realise you have made a mistake you can still fix it.

Here are some tips to make keeping records easy:

  • Keep records electronically. We use a system called Hubdoc, which makes life extremely easy for our clients (and our bookkeepers). 
  • Keep evidence of all transactions. Better to be safe than sorry. And, if you're keeping electronic records, you're not limited on space. 
  • Take pictures of your receipts to avoid faded records
  • Keep your business records separate to your personal records.


Helpful tools:

As we mentioned above, we use a tool called Hubdoc to manage clients' submitting their financial documents. Hubdoc automatically fetches and files key financial documents (like bank statements and invoices), so you don't have to. It is essentially a streamlined, digital filing cabinet. 
There are plenty of similar apps and systems available, which are all designed to streamline the process.

If you’re a sole trader with simple tax affairs, you can use the ATO app’s myDeductions tool to track your income and deductions throughout the year.

Use the ATO's Record keeping evaluation tool to review your record keeping practices from time to time and see if you’re still on the right track.

You can also find further information and tools on the ATO website: ato.gov.au/electronicrecordkeeping


If you want some help finding the right record-keeping systems for your business, get in touch with us! We're always happy to help business owners get the right procedures in place.