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Financing your business

Record keeping

The law requires that you keep accurate and complete records of your business activities. You need to maintain a method of record keeping that matches the scale of your business and that enables you to meet your obligations to other businesses, employees, and the ATO.

There is no one right method to record keeping, with many different systems working for different business arrangements. Visit the ATO website for tips and advice on recordkeeping, and consult with your financial advisors about setting up a manageable financial system that suits your operations.

You should be asking yourself the following questions:

  • In my operation, what is a business transaction?
  • Why, and in how much detail, do I need to keep business records?
  • Should I keep manual or electronic records?
  • How will I keep my cash flow transactions easy to manage?
  • What will my accountant expect to see?
  • What records relating to taxation and superannuation issues do I need to keep?
  • What records do I need to keep relating to employees?
  • What records do I need to keep relating to banking and loan repayments?
  • How will I securely file my records for the next five years for future reference?

The ATO expects records to be kept that can explain all your business transactions.

These include:

  • Sales and expense invoices and receipts
  • Cash register tapes
  • Credit card statements
  • Bank deposit books and cheque butts
  • Bank account statements
  • Employee payments and entitlements
  • Business purchases used for private purposes, showing how you calculated any private use component.

An efficient record keeping system will give you peace of mind and confidence in your business dealings. It will also help you to:

  • Prepare tax activity statements and returns
  • Keep on top of cash flow issues
  • Monitor your financial health so you can make good financial decisions
  • Demonstrate your viability to potential buyers or investors
  • Use your financial advisor wisely

If you don't have the necessary skills and experience in bookkeeping, paying a professional to maintain your financial records is wise business practice.

Alternatively, good bookkeeping skills can be learnt through short courses such as Adult Education and TAFE. The greater understanding you have of your finances, the greater control you have of your financial destiny.