Ato how long to keep financial records

In addition to keeping up with best record-keeping practice, some other benefits of digital record-keeping include ease of calculation, report generation and back-up.

It also means you can do away with cumbersome filing cabinets and physical files. READ: Is this app the cure for the old shoebox of receipts? These days, accounting software can do lots of the heavy lifting when it comes to tax time, including updating ledgers, generating invoices , preparing financial statements, calculating GST and recording your transactions.

Cloud-based, online accounting software solutions are a more affordable digital option that allow you to operate from any location. They can also provide a hassle-free remote storage solution for your financial records. You will need to pay particular attention to securing online and electronic records. You should develop a privacy policy and train staff to implement it. Learn more about protecting privacy and information. Record keeping for business Good record keeping can help you protect your business, measure your performance and maximise profits.

Developing a system to log, store and dispose of records can benefit your business by allowing you to: plan and work more efficiently meet legal and tax requirements measure profit and performance generate meaningful reports protect your rights manage potential risks. This guide provides advice about basic record keeping. Basic record keeping requirements Setting up the right record keeping system for your business will help you work efficiently, meet legal requirements and strengthen customer and staff relationships.

Personal financial records must be kept for 5 years, whereas the following records must be kept for 7 years: financial records for your company most employee records all records of fringe benefits and capital gains. Also consider Visit the ATO's small business newsroom. Use the ATO's record keeping evaluation tool. Read more about financial statements and forecasting.

Find out about collecting and storing customer information. Electronic and manual record keeping While some business owners prefer manual record keeping systems, most businesses use an electronic record keeping system — making it easier to capture information, generate reports and meet tax and legal reporting requirements.

Electronic record keeping Most businesses use accounting software programs to simplify electronic record keeping, and produce meaningful reports. Advantages Helps you record business transactions, including income and expenses, payments to workers, and stock and asset details. Efficient way to keep financial records and requires less storage space.

Provides the option of recording a sale when you raise an invoice, not when you receive a cash payment from a client. Easy to generate orders, invoices, debtor reports, financial statements, employee pay records, inventory reports.

Automatically tallies amounts and provides reporting functions. Keeps up with the latest tax rates, tax laws and rulings. Many accounting programs have facilities to email invoices to clients, orders to suppliers, or BAS returns to the Australian Taxation Office.

In general, you need to keep most records for five years. Starting from when you prepared or obtained the records, or completed the transactions or acts they relate to. Manual bookkeeping systems use a series of books or ledger accounts.

You can often get these from your local newsagent, office supply or book store. The ATO is moving towards all electronic records. So, now may be a good time to go electronic. Some advantages of digital record keeping include:.

Check what software your accountant or business advisor recommends. Find out about the cloud computing software service on the ATO website. Are you confident using a computer, but don't have the funds for an accounting package?

Consider setting up a series of spreadsheets for your accounts. Visit the ATO website for more information on manual and electronic record keeping systems. As your business grows, you may find you need to update or upgrade to a POS system.

These are computer systems that help you process sales and can support record keeping. Set up a record keeping system Evaluate your record keeping skills Use the Australian Taxation Office ATO record keeping evaluation tool to find out what records you need to keep and assess how well your business is keeping records. Keep track of your procedures Make note of the procedure you use for filing your records. Use our financial policies and procedures manual template if you don't have one already.