Record keeping is essential for your business!

Good record keeping can help you protect your business, measure your performance and maximise profits.

Records are the source documents, both physical and electronic, that specify transaction dates and amounts, legal agreements, and private customer and business details.

What are the benefits of record keeping?

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.

Record keeping helps you keep control of your finances

It’s not only big businesses that can get themselves into trouble with their finances and cash flow! We all hear about these things when it’s big business, but little guys go under without a word and can easily fall into this same vicious cash flow cycle when they don’t have control of their finances. There are many factors to this, but good record keeping can help you to see the signs that things may be going off track.

It’s great to think big, but do you have the capital behind you to expand? Do you have the basic procedures in place to keep on top of your debtors, and therefore your creditors? Do you know your inventory turn days? Regardless of what the top line looks like and what the bottom line looks like, do you know where the cash is going?

If you’ve got your finger on the pulse of your business, that doesn’t mean that you can’t get yourself into trouble. But it does mean that you can see it coming and make informed decisions about which way to take the business before things get too dire!

Learn more: Xero accounting software can increase profits

Record keeping for tax

Your business’s tax requirements will vary according to the type of business you run and the number of employees you have. Tax is a complex area. Outsourcing your tax to a professional or employing an experienced accountant can help you to avoid legal and financial problems. Before you start your business you should seek advice from the Australian Taxation Office (ATO) or a tax professional. They can explain tax considerations and record keeping requirements in these areas:

• Australian business number (ABN)
• Goods and services tax (GST)
• Business activity statements (BAS)
• Pay as you go (PAYG)
• Superannuation
• Fringe benefits tax (FBT)
• Payroll tax.

Record keeping – what things are important?

• Sales information – details of your sales and customer receipts.
• Purchases information – details of your purchases and supplier receipts.
• Payroll information – details of amounts paid and withheld, as well as copies of Payment Summaries, as well as employment contracts, employee personal information, job descriptions, awards.
• Other information – copies of bank, credit card and loan statements, BAS lodgement and payment details, copies of insurance policies, copies of equipment warranties.

Learn more: How to hire the right bookkeeper for your business

In any business there are a lot of record keeping requirements. But don’t fall into the trap of over complicating things! Keep it simple and the system will work and you’ll have your record keeping under control in no time!

If you’d like assistance, contact us today.