Good record keeping is crucial for anyone in business because it makes it easier to manage your cash flow, meet any tax obligations and understand how your business is doing. The law requires that your records must:
- explain all transactions clearly
- be in writing (electronic or paper)
- be in English
- be kept for five years (some records may need to be kept longer).
How to keep records
You can keep payments, invoicing and other business transaction records electronically or on paper. If you choose to use electronic record-keeping software, you can:
- automatically tally amounts and provide ready-made reports
- produce invoices, summaries and reports for GST and income tax purposes
- keep up with the latest tax rates, tax laws and rulings
- report certain information to the ATO online
- save on physical storage space
- back up records in case of flood, fire or theft.
If you intend to use a bookkeeper or accountant, get their advice about the best system for you. At DD’s Taxation and Accounting, we are proficient in a range of bookkeeping software.