When you are a Small Business Owner there is one thing that you have in common with other Small Business Owners no matter what Industry they are in and that is, what to do with all the paperwork that you accumulate. It seems to build up faster than you expected and it keeps getting in your way and you can never find that one piece of paper that you are looking for until its too late and you don’t need it anymore.
Your Legal Requirements
So, what do you need to keep and for how long? By law, the ATO requires you to keep business records for 5 years after they are prepared, obtained or the transactions completed, whichever occurs latest. In either English or a form that they can access and understand in order to work out the amount of tax you are liable to pay.
Records can be issued and stored in either paper or electronic form. It doesn’t matter what way you keep them; they still need to be kept for 5 years.
There are penalties if you do not maintain the required records and/or do not keep them for five years. But you can avoid these penalties by simply keeping good records.
Storing paper records electronically.
It doesn’t matter if you have a manual bookkeeping system or an electronic one, you can elect to scan and store your paper records electronically.
The ATO accepts the imaging of business paper records onto an electronic storage medium, provided the electronic copies are:
- A true and clear reproduction of the original paper records
- Kept for five years
- Capable of being retrieved and read by at all times.
Once you have imaged the original paper records onto an electronic storage medium you do not have to keep them.
What must you keep?
Following is a list of what you much keep at a minimum:
- Sales Records
- Sales invoices, including tax invoices
- Sales vouchers or receipts
- Cash register tapes
- Credit card statements
- Bank deposit books and account statements
- Purchase/expense records
- Purchase/expense invoices, including tax invoices
- Purchase/expense receipts, which include an ABN
- Cheque Butts and bank account statements
- Credit Card Statements
- Records showing how you worked out any private use of something you purchased
- Year-end income tax records
- Motor vehicle expenses
- Debtors and creditors lists
- Stocktake sheets
- Depreciation schedules
- Capital Gains Tax records
- Payments to employees
- Tax File Number declarations and withholding declarations
- Withholding variation notices
- Worker payment records
- PAYG payment summaries
- Annual reports
- Super Records
- Records of any fringe benefits provided
- PAYG withholding for business payments
- Records of amounts withheld from payments where no ABN was quoted
- A copy of any PAYG withholding voluntary agreements
- Records of voluntary agreement payments
- All PAYG payment summaries, including PAYG payment summary – employment termination payments
- PAYG payment summary – employment termination payments
- Annual reports
- Fuel Tax Credits
- Records of fuel acquired
- Records of eligible and ineligible fuel use
- Records of claim calculations
- Records of any loss, sale or disposal of fuel
- Motor vehicle records you may need to keep
- Receipts, invoices or similar documents for vehicle expenses
- A log book for a continuous period of at least 12 weeks
- A record of the total kilometres you travelled during the log book period
- Odometer readings at the start and end of each income year
So now you have an idea how what you need to keep and for how long you can spend some time going through your paperwork and throwing out things that aren’t needed.
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Question: How is your filing system? Do you have paperwork that you can now throw out after reading this?