Record keeping – the key to keeping your accountant happy

Record Keeping - the key to keeping your accountant happy

The number one skill every small business owner needs to be proficient in is record keeping.

Sure, keeping on top of paperwork is probably low on your list of priorities when you have a busy café, salon or workshop to run. But trust us. Spending a little time every week keeping your records in order is good for your business, great for your accountant and it will keep you out of trouble with the Australian Taxation Office (ATO).

Good record keeping ensures you know exactly what is happening in your business at any one time. What’s the use of finding out at the end of the financial year a product has been selling at a loss? Wouldn’t it be useful to know a client hasn’t paid their invoices for six months, yet you are still supplying them with goods?

Keeping up-to-date with your incomings and outgoings is as easy as putting a system in place and sticking to it. If you need a hand getting started, give us a call and we’ll work with you to implement a record keeping system that suits you and your business.

Importantly, when it comes to the end of financial year you will have all the documentation you need to help us do our job – completing all your business tax obligations! Being organised when it comes to tax time is going to save us time and, therefore, you money.

Tax time record keeping

Under tax law, businesses must keep full records of all transactions. Records need to be in English and clearly show the correct taxable income of the company and its employees.

Receipts must show the date of the receipt, name of the supplier, amount paid and a description of what has been bought.

These records must be retained for at least five years from the date of lodgement and must be kept in such a way that they can be easily referred to. Valorium Advisors will ensure all your records are as they need to be and easily accessible.

Examples of expenses records typically held by a small business include:

  • sales receipts
  • expense invoices
  • credit card statements
  • bank statements
  • employee records (wages, super, tax declarations, contracts)
  • vehicle records
  • lists of debtors and creditors
  • asset purchases.

Keeping track of your deductions

If you spend money in your business that results in income, then you will usually be entitled to a tax deduction.

A word of warning, though. Don’t be tempted to claim more than you spent! Too many businesses have earned the ire of the ATO for inflating deductions.

Over the course of each financial year, there are a range of legitimate deductions almost every business can claim for. These expenses include:

  • advertising and sponsorship
  • bad debts
  • borrowed money
  • business travel
  • car expense deductions
  • fringe benefits
  • home work claims
  • insurance
  • plant and equipment (depreciating assets)
  • repairs, replacement, maintenance
  • superannuation contributions
  • salary and wages
  • tax management expenses
  • telephones

The most important thing to remember about business tax deductions is to keep records!

Interested in learning more? Listen to the ATO’s podcast Good record keeping is good for business. 

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