Here are six useful tips to help you with your record keeping to satisfy ATO regulations.
Tip No 1:
In Australia, most tax records need to be kept for at least five years. This includes the business’s bank statements, deposit books, cheque butts, and cashbook and accounting records. Special requirements apply in some circumstances to capital gains tax, fringe benefits tax and substantiation rules.
Tip No 2:
Clearly separate business and private expenditure, ideally having separate bank accounts.
Tip No 3:
Fill in cheque butts in detail, with enough information on your cheque butts so that later your or your accountant can immediately understand what the payment was for. Cross-reference your transactions, putting an invoice number on the cheque butt and the cheque number on the invoice.
Tip No 4:
Regularly reconcile your cashbook entries with bank statements, which can save your accountant time and save you money.
Tip No 5:
Avoid keeping mountains of cash register tapes. You may disregard tapes after one month provided you keep Z-totals and they have been reconciled with actual sales and banking for the period. Otherwise you must keep the full rolls for five years.
Tip No 6:
Use the ATO’s record keeping evaluation tool. This is a free, interactive software program that will help you understand what your record keeping obligations are. It provides a list of records tailored specifically for your business, a report on how well the business is keeping records and suggested improvements.
You can download the record keeping evaluation tool from www.ato.gov.au
For further advice about record keeping, or starting and growing a business in general, contact ETC on 1800 007 400.