Good record keeping can help you protect your business, measure your performance and maximise profits.
Records are the source documents, both physical and electronic, that specify transaction dates and amounts, legal agreements, and private customer and business details.
Developing a system to log, store and dispose of records can benefit your business by allowing you to:
Most businesses use an electronic record keeping system to make it easier to capture information, generate reports, and meet tax and legal reporting requirements.
If you are unsure whether to keep certain records, retain them and seek advice from your accountant or financial adviser.
This guide provides advice about basic record keeping.
Setting up the right record keeping system for your business will help you work efficiently, meet legal requirements and strengthen customer and staff relationships.
There are certain record keeping requirements for businesses in Queensland, and there may be specific laws and requirements related to your industry sector. It's a good idea to protect yourself by seeking expert advice before setting up a record keeping system for your business.
Laws that apply to your business will determine how long you need to keep records for. If you use an electronic record keeping system, you must also be able to produce a hard copy of a record if the Australian Taxation Office (ATO) or Australian Securities and Investments Commission (ASIC) request it.
For financial reporting, ASIC's Regulatory index - financial reporting breaks reporting requirements down by business type.
Personal financial records must be kept for 5 years, whereas the following records must be kept for 7 years:
To meet basic legal requirements, you must keep the following:
Read more about keeping your workplace safe.
It is a good idea to keep personal and business records separate, to simplify business reporting and tax returns. For example, using a dedicated business credit and debit card for business expenses will make it easy to separate business and personal expenses.
To meet legal requirements, maximise your tax return or minimise your tax bill at the end of the financial year, keep the following records:
Learn more about basic tax requirements for your business.
Depending on your industry, keeping the following records may be a legal requirement, but it is best practice to keep them for 5-7 years:
While some business owners prefer manual record keeping systems, most businesses use an electronic record keeping system - making it easier to capture information, generate reports and meet tax and legal reporting requirements.
There are a number of issues you should consider when setting up an electronic or manual record keeping system, as each has certain advantages and limitations.
Most businesses use accounting software programs to simplify electronic record keeping, and produce meaningful reports. There are many other advantages to using electronic record keeping, as listed below.
Your business may require more than one software program to meet all of your tax and legal needs, so it's important to:
Set up a secure electronic backup system to ensure records are safely stored and regularly backed up. Daily backups are recommended, particularly for important records. Make sure the backup copies are stored in a separate location to your business in case of fire, theft or a natural disaster.
For small businesses, the cheapest backup options are CDs and memory sticks. If your business has large amounts of data, external hard drives are a popular backup option.
Cloud computing provides a way for your business to manage your computing resources and records online. The term has evolved over recent years, and can be used to describe the use of a third party for your storage and computing needs.
Cloud backup services are becoming more popular and can be automated for your convenience, but you should make sure the method you choose protects the privacy and security of your business and customers.
Learn more about cloud computing.
Some business owners may want to use a simple, paper-based record keeping system. There are certain advantages to using manual record keeping, as listed below.
For further advice on record keeping, consult your business adviser.
There are legal and financial consequences if your business does not comply with record keeping requirements of tax, business and privacy laws.
Recovering essential business records, whether they have been lost, damaged or destroyed, will help you to re-establish business operations.
Australian privacy laws apply to the collection, use and storage of personal information. Customers will take their business elsewhere if they lack confidence in your ability to protect their personal information and records.
Read the Office of the Australian Information Commissioner's guide to privacy for small business to help you apply the national privacy principles.
Learn more about protecting privacy and information.
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