Banking records – business

Banking records for business

Your banking records form an essential part of your overall business records as they show money coming in and going out of your business.

You should:

• record all the amounts you have actually received and paid
• regularly reconcile your records, so you understand exactly what money goes through your account and why. For example, private expenses paid via a business bank account which need to be excluded as part of your tax return preparation
• bank all your cash sales income into your business account regularly, to ensure accurate record keeping and GST reporting.

Whether you use a manual or electronic record keeping system, a reconciliation of daily cash sales should be undertaken which balances with any net cash sales banked.

When reconciling, you also need to take into account transactions such as cash used for business expenses, wages, cash drawings and float. For further information, see Taxation Ruling TR 96/7 Income tax: record keeping – section 262A – general principles.

Banking records required

Banking records information and examples

Information your records need to show	Examples of types of records
Payments received electronically including   tap-and-go (contactless) EFTPOS credit and debit cards online payments smart phone and tablet card processing   Cash received (for example, cash sales through a cash register) Payments made electronically Amounts withdrawn Amounts deposited	Cheque butts or payment records Bank statements Merchant facility statements (for EFTPOS and credit card facilities) Rolls of cash register tape Credit card statements Loan or lease agreements Deposit slips, books or records

How long to keep banking records

Banking records need to be kept for 5 years, starting from when you prepared or obtained the records, or completed the transactions or acts those records relate to, whichever is later.

You should keep records long enough to cover the period of review (also known as the amendment period) for an assessment that uses information from the record. For more information see records connected to an assessment that's amended.

Separate bank account

If you're operating a business through a partnership, company or a trust, you must have a separate bank account for that business.

If you are operating as a sole trader, you don't have to open a business bank account, but it's better if you do. That way you can easily separate your business transactions from your personal ones, including any cash taken from money your business receives (often referred to as 'drawings').

Tips for banking records

We recommend you:

• regularly bank all the money your business receives so your income and expenses information is up-to-date and you can easily reconcile your accounts and analyse your cash flow
• register for internet or online banking – this may simplify your record keeping and bank reconciliation process as you can  
  • easily get detailed records of your business transactions
  • usually download financial information from your online account to the accounting package of your choice
  • identify extra transactions in your account including bank fees or interest charges, and direct debits and credits
  • check and record any errors or omissions
   
• regularly reconcile your bank records, which may help  
  • you be more confident that your records contain all the information you need to prepare your tax return and activity statements
  • you to better understand your cash flow
  • reduce the time it takes to prepare your activity statements or tax returns.
   

For general principles on record keeping, see:

• Taxation Ruling TR 96/7 Income tax: record keeping – section 262A – general principles
• Index – Record keeping for business.

Information about the banking records you need to keep.