Keeping accurate records is a must for every business owner. But have you ever stopped to wonder why? Show
Every business coach, blog and book emphasises the importance of good record-keeping. And there are tons of useful articles on what types of records you should keep and how to keep them, like this post, 6 Types of Records You Need to Keep For Your Rental Property. But this article is a little different from all of those, it’s a roundup of the 7 biggest advantages to keeping accurate records. So next time your records need a little straightening up, this will motivate you to get them in order! 1) It Helps You Keep Track Of How Your Business Is Growing2) It Speeds Up Preparing Financial Statements & End of Year AccountsIf your records are accurate and organized, you’ll save yourself a lot of time when you’re doing your accounts. Preparing profit and loss statements is much easier if you have a good record of your income and expenses. The same is true when it comes to doing your end of year accounts. And if you’re putting together a balance sheet, you’ll need an accurate record of your assets, liabilities and equity. 3) It Helps You Separate Your Types of Income and ExpensesPart of being an organised business owner involves keeping track of your different types and sources of income. There’s the money you receive as your personal income (aka the salary you pay yourself) which is different from the income your business makes (from clients or properties). You’ll have business receipts and non-business receipts, and expenses which are (or aren’t) tax deductible. And making sure all these records are accurate and organised is essential for helping you keep your taxable income separate from your non-taxable income. 4) It Stops You Missing Out On Deductible ExpensesThere are certain expenses you’ll be able to deduct when you prepare your tax return - but you can’t deduct them if you’ve forgotten about them! (Or if you’re missing the receipts to back them up.) By recording all your expenses accurately when they occur, you’ll make sure you won’t miss out on claiming any deductible expenses on your tax return. And that means you’ll save yourself money! 5) It Makes Preparing Your Tax Returns Much Easier & More Accurate6) It Means You’ll Have All The Evidence You Need If You’re Audited By The Tax AuthoritiesYour business should always be ready for an inspection by the tax authorities. You’ll need to have evidence for every item you report on your tax return - which means keeping good records of your income, expenses and credits. Having this proof will make any audit quick and hassle free. But if you don’t have it, you’ll have to spend time (and maybe even money) trying to find the relevant receipts and documents. And if you can’t find them, you could end up paying penalties or more taxes. Luckily, all you have to do to avoid this expensive nightmare is keep good records! 7) It Helps You Manage Your Payments, Payroll & Profit DistributionsThere’s a lot to manage when you’re a business owner - employees and contractors to pay, outstanding client or resident payments to chase up, and shareholders or partners who need a share of your profits. And there’s no way you’ll be able to keep track of everything unless you have good records (like bills, invoices, receipts and timesheets). The Bottom Line Is: keeping good records makes your life easier and helps you save money! Keeping Accurate Records Doesn’t Have To Be A StruggleMaking sure your records are accurate, up to date, and well organized doesn’t have to be difficult. That’s where @Assist comes in handy... Our workflow management platform Toki is great for tracking tasks, progress and employee time accurately, which makes payroll and billing clients hassle-free. Our property management platform Sugu lets you upload leases and other files to entire properties/units (so everything stays in one place), keep track of contractors (and the service requests they’ve completed) and run reports (so you can see exactly where your business stands). Are you keeping accurate records? And if not, what’s stopping you? Let us know in the comments below.
Keeping accurate and up-to-date records is vital to the success of your business. Good records help you to minimise losses, manage cash, meet any legal, regulatory and taxation authority requirements and improve financial analytics. Your accountant can help you set up a record-keeping system. On this page
Record keeping is how you log, store and dispose of important financial information for your business. Records are:
You may need to access your records at different times of the year (e.g. for end of financial year) or on request (e.g. by the Australian Taxation Office). Talk to your accountant or financial adviser for tailored advice on:
Benefits of good financial record keepingGood financial record keeping can help you:
In this video you can learn about creating and maintaining good record-keeping practices in your business. This video covers:
There are certain record-keeping requirements for businesses in Queensland, and there may be specific laws and requirements related to your industry sector. You can keep records using either an electronic or manual system. You also need to make sure your records are secure, private, backed up and can be easily reported on if needed. The Australian Taxation Office (ATO) recommends that businesses use an electronic record-keeping system. The same record-keeping principles apply to both electronic and manual records. Learn more about digital record keeping for businesses. Talk to your accountant or financial adviser for advice on which method or system is best for your business, and your legal responsibilities for keeping records. Assess your record-keeping skillsUse the ATO record-keeping evaluation tool to identify what records you need to keep and review how well your business is keeping records. Electronic record keepingAn electronic record-keeping system, such as accounting software, makes it easier to capture information, generate reports, and meet tax and legal reporting requirements.
Having good accounting software or systems is important to keep your business running smoothly. The right system can help warn you if it looks like your business might run out of cash. Make sure the software has standard business reporting (SBR) forms needed to report to the ATO (such as BAS statements) and meets Australian tax requirements. Review what your business needs from accounting software before deciding which one to buy. Consider if you need software that can:
Free or paid software optionsThere are many software packages that allow you to successfully control records without needing accounting experience. There are free software packages available but make sure these meet your business's needs. There are many commonly used purchased accounting systems used by small businesses that are billed monthly or purchased outright. Consult with your accountant, financial adviser or industry organisation to assist with identifying the most appropriate software package. Software for Single Touch PayrollAll businesses must report tax and superannuation information directly to the ATO. This is known as Single Touch Payroll (STP). You should check that STP reporting is included in your accounting software. The ATO provides a register of software products that support STP reporting, including low-cost options for micro employers. SuperStreamYou must use the ATO's SuperStream to pay employee superannuation guarantee contributions to super funds. This ensures money and data are sent electronically in a standard format across the superannuation system. Make sure your accounting software is compliant with SuperStream. Understand your SuperStream requirements as an employer (including if you are self-employed). Learn more about digital record keeping for businesses from the ATO.
You may prefer to use a simple, paper-based record-keeping system.
You must keep your records for a certain period. The length of time will depend on the type of record and your business type or industry. There are legal requirements for how long you keep some records. These include:
Keeping your records secure and privateIf you collect and keep customer records, you'll need to protect and respect your customers' privacy. You may have to comply with the Privacy Act 1988. Read the Office of the Australian Information Commissioner's guide to privacy for small business to help you apply the national privacy principles. New technologies make it easier to access, transmit and misuse personal information. You will need to pay particular attention to securing online and electronic records. You should develop a privacy policy and train staff to implement it. Learn more about protecting privacy and information. Reporting on your recordsIf you use an electronic record-keeping system, you must be able to produce a hard copy of a record if the ATO or Australian Securities and Investments Commission (ASIC) request it. Find financial reporting requirements broken down by business type from ASIC. Backing up recordsSet up a secure electronic backup system to ensure records are safely stored and regularly backed up. Daily backups are recommended, particularly for important records. Online (or 'in the cloud') backup services allow you to access records from anywhere, at any time. They are generally inexpensive and offer benefits for flexible work and business continuity. Make sure any online system protects the privacy and security of your business and customers. Learn more about cloud computing. Cheap backup options include memory sticks and external hard drives. Make sure any physical backup copies are stored in a separate location to your business in case of fire, theft or a natural disaster. What records to keep
Keep these records to meet basic taxation legal requirements. Cash movement
Sales
Purchases
Keep these records to meet legal requirements and to accurately determine your tax position at the end of the financial year. Stocktake
Debtors and creditors
Capital gains details
Depreciation
Expenses
Staff and wages
Basic accounting records
Agreements
Assets and liabilities
Other documents
Keep your personal and business records separate to simplify business reporting and tax returns. For example, use a dedicated business credit and debit card for business expenses to make it easy to separate business and personal expenses. Financial record-keeping checklist
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