It may seem like the importance of record-keeping is overly stressed by us, but it’s a critical part of the wrap-up of the year-end.
Good record-keeping makes it easier to meet your tax obligations, manage your cash flow and make sound business decisions going forward. Put the hard work in at the end of the financial year to get your business organised and allow you to work smarter in the year ahead.
Essential business records that must be kept include:
Expense Or Purchase Records
You must keep records of all business expenses, such as receipts, tax invoices, cheque book receipts, credit card vouchers and diaries to record small cash expenses.
These records include lists of creditors or debtors and worksheets to calculate depreciating assets, stocktake sheets and capital gains tax records.
Income & Sales Records
You must keep records of all income and sale transactions such as tax invoices, receipt books, cash register tapes and records of cash sales.
Documents such as bank statements, loan documents and bank deposit books need to be kept in preparation for your tax return.
Fuel Tax Credits
To claim fuel tax credits for your business, records must show that you acquired the fuel, used it in your business, and applied the correct rate when calculating how much you are eligible to claim.
Payments To Employees & Contractors
Records of your workers need to be kept, including tax file numbers, withholding declaration forms, contributions to their superannuation, wages and any other payments made to them.
By law, business records must be kept for a minimum period of five years for sole traders and individuals and seven years for companies’ and payroll transactions after the record is created, updated, the transaction is completed or the return in which they were included was lodged, whichever is the latter.
Records can be kept electronically or on paper, must be in English or in a form that can be easily converted, and thoroughly explain all transactions. Failure to keep the correct tax records can incur penalties from the ATO.
By maintaining consistent records throughout the year of your major and minor expenses, you will be in a better position to face the end of the financial year. Take the stress and hassle out of this tedious process by coming to us (your registered tax agent) with all of the information that is needed for your tax returns to be completed.
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