Running a business can be unpredictable, but there is one certainty you can rely on – a good record keeping system can make tax time much easier!
The tax records you have to keep
You'll need to keep records to help you prepare your Business Activity Statement (BAS), and annual income tax return. Depending on your tax obligations you may need to keep other records as well.
Here’s a list of some of the tax records that business owners have to keep:
- income tax and GST
- sales records
- purchase/expense records
- year-end income tax records
- banking records
- payments to employees and contractors
- PAYG withholding for business payments
- fuel tax credits
- Capital Gains Tax.
How long should you keep records for?
Legally you need to keep your records and documents for different lengths of time depending on the government department that needs the information or your business structure. In general, for:
- Sole traders: must keep records for at least five years. You can decide whether to keep electronic or paper copies of records, but it’s recommended you store these in a safe and secure location and have a back-up of your records. Records have to be in English, or in a form that can easily be converted.
- Companies: have more in-depth record keeping requirements. Financial records for companies must be kept for a minimum of 7 years.
How to keep records
You can keep records in paper form or store everything electronically. Whichever you choose, make sure you store your records in a secure place. Familiarise yourself with proper backup procedures and if possible, have a secure off-site storage location.
Find out what you need to do to protect your records in an emergency.
If you decide to store your records electronically, make sure you’re aware of what you can do to protect against cyber-crime.
Did you know?
- If you’re a sole trader you can record your business income, expenses, and vehicle trips on your smart device using myDeductions. At tax time you can upload your data to pre-fill your tax return or email it to your tax agent.
Find out more
- Visit our finance & accounting topic for information on setting up a basic bookkeeping system.
- Find specific details on what employment records you need to keep.
- See the Record keeping for small businesses page on the ATO website.
- Read about the importance of protecting your customers' information in our cyber security section.
- Use the ATO’s record keeping evaluation tool to decide what records you need to keep.