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Starting your business with a good record keeping system will help you track your business performance, meet your reporting responsibilities and access finance.
We can help you to understand:
Why record keeping is important
All businesses in Australia are required by law to keep records and documents related to how their business operates.
As a business owner, you will need to create and keep a range of records for your business, including records on:
- how much money your business makes and how much it spends
- who you hire or employ
- where your business operates from
- how things get done in your business.
Keeping good records will also help you:
- keep track of your business health, so you’re able to make sound business decisions
- manage your cash flow
- demonstrate your business’s financial position to lenders, suppliers, accountants and prospective buyers
- protect your business and minimise costs if you require records to respond to compliance or legal issues
- complete and lodge your tax and super records and returns.
Did you know?
You may need to rely on your records if disputes or other issues arise in your business. Keeping good records as a habit can save you a lot of time and money you would’ve spent trying to come up with the records you need.
What records do you need to keep
There are a range of records that you should keep when running a business. These can be grouped into:
Your business’s financial records allow you to track your cash flow, prepare your tax return and understand your overall financial position. They can include documents such as:
- receipts and invoices for goods and services you buy and sell
- staff rosters, attendance and pay records
- contractor records
- bank statements
- a register of your business assets
- depreciation schedules
- tax documents including activity statements and annual tax returns
- documents showing how the business is financed e.g. any business loans and/or shares in the business.
Did you know?
Banks and other creditors might need you to provide evidence of your business’s financial position before providing you with finance or goods and services on credit.
Find out more
Read the ATO’s Income and expenses for tax returns to find out more about the records you need to keep for your tax return.
Legal records are documents that relate to the operation of your business. These documents can include:
- business registration documents
- contracts with suppliers and other clients
- insurance documentation.
Did you know?
If your business is incorporated you will need to keep copies of board meeting minutes and any constitution for the Australian Securities and Investment Commission (ASIC). For more information read What books and records should my company keep on the ASIC website.
Employee records (if you have employees)
Employee records include any information you have about the employees of your business including their:
- financial records, such as bank accounts, tax file numbers and superannuation details
- contact details, such as addresses, phone numbers and emergency contacts
- work performance and history, including any performance issues or workplace injuries.
Keeping good employee records means you can pay your employees correctly and meet your tax and super responsibilities.
Did you know?
Employee records might be needed by insurers, Fair Work Commission or your state Work Health and Safety organisation.
Find out more
- Read an overview of employees and record keeping.
- Check out the Fair Work Ombudsman (FWO)’s record-keeping requirements.
Policy and procedures
Policy and procedure records outline how you will manage the day-to-day operation of your business. They include:
- work place health and safety plans
- dress standards
- sexual harassment policies
- operation manuals.
It’s a good idea to provide your staff with a copy of your policies and procedures when they start work with you. You can include it as a part of their employment contract.
Did you know?
- Some industries need you to provide evidence of your operating procedures to clients or when working on particular sites.
- Keeping your policy and procedures organised will allow you to update them easily as legislation changes.
Other business records
It can also be a good idea to keep other records even if you’re not legally required to, such as:
- customer records - personal details, products purchased and product enquiries that are useful for finding new customers
- customer complaints - details of complaints about products, service, staff or anything else, and steps taken to resolve them
- details of any disputes with other businesses - including how you went about resolving disputes
- quotes given and won - specifics of jobs and time spent on them to help with future quoting
- details of advertising campaigns and success - to make it easier to repeat advertisements and plan future advertising campaigns
- insurance policies - regularly review and update your business insurance, especially when your business grows or changes, including leases, advertising, quotes and tenders.
Find out more:
- Visit the ATO website for information on Managing your small business records. They also have a record keeping evaluation tool to help you work out what tax records you need to keep for your business.
- Find out what books and records to keep if you’re running a company.
- Read the Queensland government’s information on basic record keeping requirements.
How long should you keep records for
You need to keep your records and documents for different amounts of times depending on the government department or organisation that needs the information.
- Australian Securities and Investment Commission (ASIC) requires companies to keep records for seven years.
- The Fair Work Ombudsman (FWO) requires you to keep employee records for seven years.
- The Australian Taxation Office:
How should you keep your records
There are a range of methods and tools you can use to keep records for your business. Records kept for the ATO and ASIC must be:
- in writing, either on paper or electronically
- in English
- explain all transactions.
Read more on record keeping for small business from the ATO.
Electronic or paper copies
You can keep your records either electronically or in paper (hard) copies. There are benefits to both.
Paper or hard copies of records are often the original copies of your documents.
The advantage of keeping the original records is that they’re sometimes required if the record is used as evidence in legal matters. Paper copies of records can also be used to support any electronic records if there is dispute over the electronic copy.
If you are keeping paper copies of your records however, it’s important to store them properly, as they can:
- often be misfiled
- take up a lot of storage space
- decay over time or be destroyed by water or excessive sunlight.
Electronic copies of records are now generally accepted by government departments such as the ATO and ASIC.
To keep your records electronically, you must make sure they are a true and clear copy of the original. The records must also be on a computer or device that:
- you have access to (including all passwords)
- is backed up in case of computer failure
- allows you to control the information that is processed, entered and sent.
Advantages of keeping electronic records include:
- records can be easy to search and easy to create filing systems for
- it is easy to create additional copies of records
- there is software available to help you with keeping electronic financial records
- certain record keeping software can link with the ATO lodgment systems, reducing the time you need to spend on reporting to the ATO
- electronic records requires less physical storage space than paper records
- certain apps will allow you to create records on the go and organise them from your mobile device.
Disadvantages to keeping electronic records include:
- if the data is kept on a hard drive or USB device, it can be lost or susceptible to data corruption
- needing additional security to make sure that the information on the records is protected from computer viruses or people gaining unauthorised access
- hard copies might still be needed for legal and other uses.
If you decide to keep electronic records, it’s quite easy to transform hard copies of invoices and statements into electronic versions using the camera on your smart phone or with scanning equipment. Make sure you choose a system of record keeping you can understand and operate easily.
Tip: If you decide to buy a record-keeping system, consider getting Standard Business Reporting (SBR) enabled software. With SBR-enabled software you can lodge a range of government forms pre-filled directly from your record-keeping system.
Did you know?
If you work for yourself (as a sole trader) you can use the myDeductions tool in the ATO app to help keep track of your income and deductions. The information can then be used to prefill your tax return.
Find out more
- Read more on electronic record keeping on the ATO website.
- Check out how to set up a basic bookkeeping system.
- Read about things to consider when deciding between electronic and manual record keeping on the Business Queensland website.
- If you’re running a company, read ASIC requirements for storing signed documents lodged online.
Using a professional to help you with your records
It can be difficult to set up your own record keeping system without a bookkeeping background. If you need help getting started, contact your accountant, bookkeeper or business advisor and get their advice on setting up the best system for you.
Check out the ATO’s information on Advice or help setting up record keeping systems.
Privacy and security of personal information
Australian privacy laws apply to the collection, use and storage of personal information.
Personal information is information that could identify who someone is. Some examples are name, address, telephone number, date of birth, and bank account details.
Customers will take their business elsewhere if they lack confidence in your ability to protect their personal information and records.
While employee records are exempt from the privacy laws, they are still private and confidential. Generally, no one can access them other than the employee, their employer, and relevant payroll staff. Employers must make copies of an employee’s records available at the request of an employee or former employee.
Find out more
- Read the Office of the Australian Information Commissioner's guide to privacy for small business to help you apply the national privacy principles.
- Learn more about protecting privacy and information from Business Queensland.
- Find out about ways to keep your records secure in When things don’t go to plan.