Learn about record keeping – what records you need to keep, how to keep records and how long to keep them for.

Benefits of record keeping

There are many benefits to keeping good records. It can help you:

• keep track of your business’s health, so you’re able to make good business decisions
• meet your tax and superannuation obligations
• manage your cash flow
• demonstrate your financial position to banks or other lenders.

Tax and superannuation records you must keep

You must keep records of all transactions related to your business’s tax and superannuation affairs, including records that support the information you include in your tax returns & reports.

The records you need to keep depend on the tax and superannuation obligations of your business and the structure of your business (sole trader, partnership, company or trust).

The Australian Taxation Office (ATO) requires that:

1. Your records must not be changed and must be stored in a way that restricts the information from being changed or the record damaged.
2. 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), whichever is the later.
3. You need to be able to show the ATO your records if they ask for them.
4. Your records must be in English or able to be easily converted to English.

We recommend you check the record-keeping requirements of all organizations you deal with.

How to keep records

You can keep records electronically or in paper form. The ATO recommends that businesses use electronic record keeping if possible, as they are progressively moving towards electronic reporting for tax and super obligations. Keeping your records electronically should make some tasks easier and save you time once you have your system set up.

If you keep your records electronically, there’s no need to also keep paper copies unless a particular law or regulation requires a paper copy.

You can also store and keep paper records electronically. The ATO accepts images of business paper records saved on an electronic storage medium, provided the electronic copies are a true and clear reproduction of the original paper records and meet their record-keeping requirements. Once you have saved an image of your original paper records, you don’t have to keep the paper versions.

Whichever you choose, make sure you store your records in a secure place. Back up your records and, if possible, have a secure off-site storage location, which may include cloud storage.

The records must also be on a computer or device that:

• you have access to (including all passwords)
• is backed up in case of computer failure
• allows you to control the information that is processed, entered and sent

How long to keep records for

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).

There are some situations where you will have to keep records for longer than five years, including if your business owns capital assets that are subject to capital gains tax.

The Australian Securities & Investments Commission (ASIC) requires companies to keep records for seven years.

If you have any questions, feel free to ask them in the comment section. We will be happy to answer all your queries.