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  • Record keeping for the building and construction industry

    Do you operate a business in the building and construction industry such as a plastering, plumbing or bricklaying business? This fact sheet will help you understand good record keeping practices specific to your business.

    Maintaining a good record keeping system will assist you to keep track of paid and unpaid accounts. You should be able to easily calculate all your sales from your record keeping system. This will also allow your tax advisor to work out your business tax liabilities. Our research shows that good record keeping helps businesses succeed.

    Attention

    Record keeping is a legal requirement.

    End of attention

    Recording income

    Use pre-numbered invoice books

    You should issue an invoice for each sale. Issue a tax invoice if you are registered for GST. This helps you keep track of all services provided and monitor outstanding accounts. If you decide to cancel an invoice or make a mistake, do not remove the invoice from the book. Do not use your invoice book for quotes.

    Use pre-numbered quote books

    This helps keep track of all services provided. Do not remove quotes from the book. Reconciling your quote book to the invoice book also ensures that all income has been reported. Do not use your quote book for invoices.

    Record every sale and purchase

    Businesses must keep records that detail each sales transaction as it occurs. If you purchase materials for a job and charge the customer for this, make sure it is included in your income and expenses.

    Retain a summary record

    Maintaining summary records will help you to monitor your business profits, losses and cash flow. The most common method used to record sales is with a receipt or invoice book.

    Retain a detailed record for at least a month

    Detailed records must be kept for at least one month if you complete and retain summary records, or five years if you do not retain a summary record.

    You may discard individual records after one month if you have reconciled the summary records with the individual records and the banking for that period. The reconciliation must take into account any cash earned that has been withdrawn for personal uses or used to pay for expenses in cash. The reconciliation must be kept for five years.

    Example

    Paul is a plasterer, has an ABN, and works as a contractor. He has been hired by Kwan to plaster the inside of a new building.

    Paul issues invoices to Kwan for work completed, including amounts for the supply of materials. Paul keeps summary records for tax purposes. He also keeps detailed records for at least a month but then discards them when he reconciles the summary records with the individual records and the banking for that month. He uses these records to report the total of all income from Kwan throughout the year to the ATO.

    By doing the right thing and keeping good records Paul can see his profits clearly, and can use them to grow his business.

    Check what you know

    The following is a checklist of the minimum record keeping requirements:

    • record all sales as they occur
    • retain detailed sales records for at least one month
    • retain summary records for five years where you have reconciled your business income
    • account for all cash wages and other cash purchases
    • account for all cash used for personal living expenses taken from business income
    • reconcile sales with accounting records and cash deposited in the bank.

    More information

    For more information:

    • visit ato.gov.au/recordkeeping
    • visit ato.gov.au/otherlanguages for tax and superannuation information in 25 languages, including translated information about record keeping (Record keeping for small business)
    • phone us on the ATO business tax infoline on 13 28 66 between 8.00am and 6.00pm, Monday to Friday. If you do not speak English well and need help from the ATO, phone the Translating and Interpreting Service on 13 14 50.
    • visit one of our shopfronts
    • speak to your tax adviser

    If you are deaf or have a hearing or speech impairment, phone the ATO through the National Relay Service (NRS) on the numbers listed below, and ask for the ATO number you need:

    • TTY users, phone 13 36 77. For ATO 1800 free-call numbers, phone 1800 555 677.
    • Speak and Listen users, phone 1300 555 727. For ATO 1800 free-call numbers, phone 1800 555 727.
    • Internet relay users, connect to the NRS at relayservice.com.au
      Last modified: 01 Aug 2013QC 36133