Record-Keeping: How, What Why – Part 1

Part One

Do you understand why record-keeping is so important (whether you’re in business or not)? No? Well here is your complete why, what and how of record-keeping. In today’s blog you will learn why you should do it and exactly which documents you should be keeping. This blog will assist you whether or not you are a business owner.

Why Should You Keep Records?

Because you have to – it’s the law! We are all obliged to keep our records, personal and/or business-related by law. Of course, there are other reasons why you should keep records and these are covered later in the blog.

For How Long?

In general, you need to keep records for 5 years after they were prepared, obtained or a particular transaction completed, whichever occurs last. There are variations to this requirement so refer here to read more.

What Do You Have To Keep?

Basically, you need keep records relating to any income you have received and details of any expenses you have incurred in relation to receipt of this income. The type of income and expense records you need to keep depend a lot on your personal situation and how you obtain your income – review the table below for more information. Note: always obtain advice from your tax agent or accountant about how the following may apply to your situation.

Non-Business Owner

Salary, wages & allowances PAYG Payment Summary
Bank Interest Bank statements or passbook
Dividends Statements from company, corporate unit trust, public trading trust or corporate limited partnership that pays you dividends or makes distributions to you
Managed Funds Statement or advice from fund showing the amount of distribution
Rental Property Rental invoices, statements from property agents, bank statements showing receipt of rental income, record of any bond monies held
Government Payments PAYG Payment Summary or letter from agency stating the amount received
Car Expenses Records required depend on the estimated business kilometres travelled. Find out more here
Travel Expenses Travel diary showing dates, places, times, duration or activities; receipts for air, bus, train, tram, taxi fares, road and bridge tolls, parking, car hire etc. Find out more here
Clothing & Uniform Receipts for purchase of uniforms, protective clothing, dry-cleaning and sun protection items – Find out more here
Self-Education Expenses Receipts for course fees, textbooks, stationery, assets purchases eg computer, travel incurred
Other work-related expenses Diary or logbook showing the apportionment between personal and business use of home office utilities. Receipts for asset purchases and/or sales eg computer, office furniture
Rental Expenses Contract of sale/purchase, bank statements showing interest charged on money borrowed for the property, receipts for advertising, bank charges, council rates, gardening, agent fees, repairs and maintenance; documents related to depreciation of assets or any capital works e.g. structural improvements
Donations or Gifts Receipts or a letter from the charity showing amount donated
Medical Expenses Statements from Medicare or Private Health Fund, receipts for payments to hospitals, doctors, dentists, opticians, chemists for expense relating to an illness or operation. Find out more here

Business Owner

Any of the above that may apply to your personal situation plus the following:

Sales Tax invoices and a list of debtors; till tapes (if in retail shop); bank statements showing receipt of sales income; merchant statements
Business Expenses Receipts and tax invoices for any purchase made related to your business operation, bank statements, cheque butts, credit card statements
Assets Receipts for any major asset purchased e.g. computers, motor vehicles; details of depreciation and/or disposal of assets
Employee Wages Employee records including Tax File Number declarations, payslips, payment summaries and details of termination payments.
Superannuation Details of how you worked out your employees’ super contributions, evidence that the contributions were paid, the employees’ super choice forms. Find out more here
Fringe Benefits Tax All FBT records (if applicable – Find out more here
Fuel Tax Credits Details relating to how you worked out your FTC and fuel purchase receipts – Find out more here
Motor Vehicle Receipts of purchase, loan documents, details of type of vehicle, sale of vehicle details (if applicable), receipts for fuel, repairs, registration, insurance
Stocktakes If your business has inventory then you may do an annual stocktake. Keep details of your stocktake to show your tax advisor
Taxation and BAS BAS copies, tax returns copies, personal super contributions, copies of ABN and GST registration

For part 2 of this blog please click here


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