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Record keeping for small business

Last updated 22 June 2023

Why keep records

Keeping accurate and complete records is required by law. It is also essential for anyone in business because it makes it easier to:

  • manage your cash flow
  • meet your tax obligations
  • understand how your business is doing.

What the law requires

By law your records must:

  • explain all transactions
  • be in writing (electronic or paper)
  • be in English or in a form that can be easily translated
  • be kept for 5 years (some records may need to be kept longer).

If you don't keep the right tax records, you may incur financial penalties, or be required to complete a record-keeping course (or both).

How to keep records

You can keep invoicing, payment and other business transaction records electronically or on paper.

Keeping electronic records will help you perform daily business activities and meet your tax and super obligations.

With the right electronic record-keeping software, you can:

  • automatically tally amounts and provide ready-made reports
  • produce invoices, summaries and reports for goods and services tax (GST) and income tax purposes
  • keep up with the latest tax rates, tax laws and rulings
  • report certain information to us online
  • save on physical storage space
  • back up records in case of flood, fire or theft.

If you intend to use a bookkeeper or accountant, get their advice about the best system for you – choose a system you can understand and operate easily.

Business records you need to keep

You must keep records to help you prepare your business activity statements (BAS) and annual tax return, and to meet other tax obligations. Make sure you keep the records listed below.

Income and sales records

Keep records of all income and sales transactions, including:

  • tax invoices
  • receipt books
  • cash register tapes
  • records of cash and digital sales.

Expense or purchase records

Keep records of all business expenses, including cash purchases. Records could include:

  • receipts
  • tax invoices
  • cheque book receipts
  • credit card vouchers
  • diaries to record small cash expenses.

If you bought something for your business, but sometimes use it for private use, you also need to keep records showing how you worked out how much of its use is private.

Year-end records

Keep year-end records, including:

  • lists of creditors (people you owe money to) or debtors (people that owe you money)
  • expenses you incur buying, maintaining, repairing and selling business assets or stock.

You should keep worksheets to calculate the decreasing value of your assets (also called 'depreciating assets'), stocktake sheets and capital gains tax records.

Bank records

Your banking records can include things like:

  • deposit slips
  • cheque butts or payment records
  • bank and credit card statements
  • loan or lease agreements.

Your business and personal expenses must be kept separate if you are a partnership, company or trust.

If you're a sole trader, a separate business bank account can make your records easier to manage.

Other records you may need to keep

Depending on your tax obligations you may also need to keep other records. Some examples are listed below.

Goods and services tax (GST) records

If you are registered for GST, keep all tax invoices from your suppliers, which will help you claim GST credits. You must keep any other document that records adjustments, a decision or a calculation made for GST purposes.

You report GST amounts and claim GST credits for purchases on your business activity statements (BAS).

Fuel tax credits records

To claim fuel tax credits for your business, your records must show you:

  • acquired the fuel
  • used the fuel in your business
  • applied the correct rate when calculating how much you could claim
  • are carrying on business activities that are eligible for fuel tax credits.

Employee and contractor records

If you have workers, you will need to keep records of any:

  • tax file number (TFN) declarations and withholding declaration forms
  • wages, allowances and other payments you make to them
  • tax you withhold from payments you make to them
  • contributions to their super guarantee and how it was calculated
  • evidence that you have offered each eligible employee a choice of super fund
  • fringe benefits you provided
  • contracts.

Your tax and super obligations will change depending on whether your worker is an employee or a contractor. It's important you correctly determine and document your workers' classification, ensuring mutual understanding.

Record keeping evaluation tool

To work out what records you need to keep for your business, you can use the record keeping evaluation tool.

Seeking advice or help

Registered tax or BAS agents

You may want to get a registered tax or BAS agent to help you with your tax obligations. If you do use a tax agent, you still need to have all your records ready to give to them. This way, they can help you claim all the business tax deductions you are entitled to.

It's important to choose a registered tax or BAS agent, because it means they are qualified and experienced with tax. Only a registered agent can legally charge you a fee.

To check your agent is registered, you can search the registerExternal Link on the Tax Practitioners Board website or phone 1300 362 829.

How we can help

You can get help with your record-keeping systems from us, free of charge. Our Tax basics for small business videos can help you learn about a range of tax and superannuation topics and make it easier for you to comply with your obligations.

You can also phone us on 13 28 66 between 8:00 am to 6:00 pm, Monday to Friday.

Alternatively, you can speak to your professional tax adviser.

If you don't speak English

Our website has information and videos in other languages to help you understand tax and superannuation in Australia. You can:

If you have a hearing or speech impairment

If you are deaf, or have a hearing or speech impairment, phone us through the National Relay Service (NRS) on the numbers listed below:

  • TTY users, phone 13 36 77 and ask for the ATO number you need.
  • Speak and Listen (speech-to-speech relay) users, phone 1300 555 727 and ask for the ATO number you need.
  • Internet relay users, connect to the NRS on Link and ask for the ATO number you need.