Keeping accurate and up-to-date records is vital to the success of any business. Well-kept records help you to minimise losses and manage cash. It is also a requirement under taxation laws. Your accountant can help you set up a record-keeping system.
Basic records to keep
- Cash book or financial accounting program that records cash receipts and cash payments
- Bank account (e.g. cheque books, deposit books and bank statements)
- Invoice books, receipt books, cash register tapes, credit card documentation, credit notes for goods returned and a record of goods used by the business owner personally
- Cheque butts (larger purchases), petty cash system (smaller cash purchases), receipts, credit card statements, invoices, any other documents relating to purchases including copies of agreements or leases
Records to keep for end of financial year
- Details of stock on hand at the beginning and end of the year, to work out whether the business has a taxable income for tax purposes
Debtors and creditors
- Details of all your debtors and creditors for the period - ask your accountant what you need to give them
- Original purchase agreements or tax invoices, a depreciation schedule, the cost of transporting the items to your business (if applicable) and installation costs (if applicable) - to obtain tax deductions for depreciation (wear and tear) of assets
- Cheque butts, receipts, cash register tapes, copies of statements and invoices, credit card documentation, details of payments by cash and log books - other than the normal purchases of the business
Staff and wages
- Full details of wages, employment contracts, tax deducted, fringe benefits, superannuation and related matters such as sick pay and holiday pay
- Stock records, accounts receivable, accounts payable, and other basic accounting records
- Sales and purchase contracts, loan agreements, rental agreements, lease agreements, franchise agreements, sale and lease back agreements, trading agreements with suppliers, legal documentation, evidence of deposits with utilities, contracts with telephone companies and your business name registration certificate
Your legal responsibility
- How long records need to be kept is set in most cases by law and your accountant can advise you. For example, income tax records must be kept for at least 5 years.
- Businesses that keep customer records will need to protect and respect customers' privacy. Your business may also have to comply with the Privacy Act 1988.