As a business owner, it is important that you have the right record keeping system so your business can run efficiently. Aside from legal requirements, you should also meet the basic record keeping requirements. There is a plethora of benefits you can reap from complying with these requirements such as strengthening your relationship with staff and customers.
Based on specific laws, there are requirements that businesses secure before setting up a record keeping system. For instance, using an electronic record keeping system requires business owners to produce the record’s hard copy once the Australian Securities and Investments Commission (ASIC) and Australian Taxation Office (ATO) request it.
ASIC also has a roadmap-financial reporting which allows business owner to break down reporting requirements based on their business type. It is also recommended that business owners keep record for 5 years. However, there are records that should be kept for 7 years such as:
• employee records
• company’s financial records
• all records of capital gains and fringe benefits.
As part of the basic legal requirements, the following must be kept:
• bank accounts including deposit books, bank statements and cheque books.
• financial accounting program or cash book used for recording cash payments and receipts.
• employment records including benefits, remuneration, hours of work, overtime, leave superannuation benefits, termination of employment, type of employment, personal contact of employee, employment details and employee’s personal details.
• sales records including receipt books, invoice books, cash register tapes, credit card documentation, credit notes for goods returned and goods used.
• Work, health and safety (WHS) records such as chemical storage records, first aid incident register, workplace assessments, Material Safety Data Sheets (MSDS), risk register and management plan, workplace incidents and names of key WHS people.
End of financial year records are also very important and to meet legal requirements, a business owner needs to minimise tax bill or maximise tax return at the end of the financial year.
As a requirement, a business owner needs to keep the following records:
• a list of debtors and creditors for the entire financial year
• depreciation details such as depreciation schedule, tax invoices, purchase agreements, installation cost and the cost of transporting the items to your business
• stock on hand details form the beginning and end of the financial year
• expense records including receipts, cash register tapes, cheque butts, copies of statements, credit card documentation, payment details and log books
• agreements such as loan agreement, rental agreements, lease agreements, franchise agreements, sale and lease back agreements, trading agreements with suppliers and legal documentation
• basic accounting records such as accounts receivable, accounts payable and stock records
• staff and wages details including employment contracts, tax deducted, sick pay, holiday pay, fringe benefits , superannuation
• other documents such as contracts with telephone companies, deposits with utilities, business name registration certificate and capital gains records.
Keeping these records for 5 to 7 years is also one of the best practices to follow. Aside from the aforementioned records, certificates and licenses are also important. Make sure you also keep customer records, customer complaints, details of any disputes, employee resumes and job applications, insurance policies, quotes given and won and advertising campaigns and success details.