Record keeping and accounting – the basics
Bookkeeping can be the bane of a business owner’s life — but taking time to set up efficient, integrated systems at the outset reaps huge rewards.
The days of keeping business records on multiple ledgers or one overloaded computer are fading fast.
And while some micro businesses may feel more comfortable with manual systems, many SMEs are moving to web-based software solutions.
Subscription-based services now give small businesses affordable access to powerful ‘cloud’ accounting tools.
Systems are designed to automatically integrate, so information previously logged multiple times manually can now be automatically shared.
For example, information from your point of sale system may automatically adjust stock levels, with invoice details sent through to an accounting package and reconciled against your business account.
Adopting integrated records systems can give you an edge. It saves you valuable time, helps manage cash flow and allows you to meet your tax obligations efficiently.
It also lets you track your business performance in real time and share information easily with your financial advisors.
No matter how you choose to keep your business records — in the cloud, offline or on paper — there is a basic standard you need to meet.
Legally, your business records need to explain all your business transaction be in English and be kept for five to seven years.
The Australian Tax Office requires all businesses to keep:
- Income and sales records
- Expense or purchase records
- Year-end records
- Banking records.
Depending on your tax obligations, you may need to keep further records in relation to GST, fuel and employees.
Employment records must be kept for seven years from creation and include:
- Basic employment details
- Pay records
- Hours worked
- Leave entitlements
- Superannuation contributions
- Tax you withhold
- Fringe benefits provided
- Tax File Numbers.
CCIWA provides employment form guides that are downloadable for almost every aspect of the employment lifecycle.
The ATO also provides an online evaluation tool to tell you what records your business is required to keep and, for operational businesses, how well you are doing the job. Access it here.