Good record-keeping helps you manage your business and cash flow, and ensures you get the right outcome with your tax return.
The ATO’s top 4 tips for record-keeping are:
- Always keep detailed records of payments to contractors providing taxable payment reporting system (TPRS) services so it’s easier to prepare and lodge the Taxable payments annual report (TPAR) by 28 August.
- Make sure your vehicle logbook records are no more than 5 years old if you are claiming car expenses and use the logbook method. If your logbook is older than this when you plan to lodge your return, you need to start a new logbook.
- Check if government grants or payments you receive are taxable and must be reported as business income when you lodge your tax return. This includes payments from the National Disability Insurance Scheme (NDIS) or Child Care Subsidy payments.
- Record the amounts withheld from any payments you receive and keep written evidence from the payer, including their details and ABN. Payments you receive may be subject to withholding because you didn’t quote an ABN, you’ve done subcontracting work through a labour-hire firm, or you have a voluntary agreement with the payer to withhold tax amounts.
There are advantages to keeping business records digitally. If, for example, you use a commercially-available software package, it may help you:
- Keep track of business income, expenses and assets as well as calculate depreciation;
- Streamline accounting practices and save time so you can focus on the business;
- Automatically calculate salaries and wages, PAYG withholding, employee superannuation and other amounts for activity statement and other purposes;
- Meet Single Touch Payroll (STP) reporting obligations;
- Back up records using cloud storage to keep records safe from flood, fire or theft.
If you use cloud storage, either through accounting software or a separate service provider, for example, Google Drive, Microsoft OneDrive or Dropbox, you should ensure:
- The record storage meets the record-keeping requirements;
- You download a complete copy of any records stored in the cloud before you change software provider and lose access to them.
Regardless of your eInvoicing software or system, you are responsible for determining the best option for storing business transaction data. You should:
- Ensure that the process meets the record-keeping requirements;
- Discuss the options with your software provider;
- Talk to our KMT business adviser if necessary.
Contact our KMT tax adviser about the best way to calculate the deductions and the record-keeping requirements.
This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances and get professional advice from a qualified accountant at KMT Partners.