Record-keeping requirements for your business

Here are some tips to help you avoid common record keeping errors.

• Keep accurate records of all cash and electronic transactions.
• Reconcile cash and EFTPOS sales regularly.
• Check for mistakes if things don’t add up.
• For expenses that are for both business and private use, work out and record the business portion accurately.
• If you have used trading stock for private purposes, remember to account for the stock as if you’ve sold it and include the value in your business’s assessable income.
• Ensure you have sufficient records to substantiate business expenses claimed as tax deductions.
• Don’t use estimates to prepare your tax returns and business activity statements (BAS). Ensure you have complete and accurate records to substantiate the information you include in them.
• Be accurate in how you use your source records to work out the amount you claim for the research and development tax offset (if it’s applicable to your business).
• Keep records for 5 years – from when you prepared or obtained the record, or completed the transaction or related acts, whichever is later. You should also keep records long enough to cover the end of the period of review.
• Keep accurate and detailed records if you are paying contractors to provide certain services on your behalf to help you complete your taxable payments annual report (TPAR).
• If you are claiming GST credits, set aside your GST in a separate ledger account to make your record keeping and calculations easier.
• If you had PAYG amounts withheld from payments to your business, ensure your payer gives you a PAYG payment summary. You may need it to substantiate any PAYG credits you later claim in your tax return.