What paperwork do we need to keep?

What paperwork do we need to keep?

Agribusiness
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This is a good time to review what paperwork you should keep for your business.

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With the start of a new tax year upon us this is a perfect time to review what paperwork you should keep for your business.

The ATO requires small business to retain all documents in relation to the start-up, running and selling of your business for a period of five years. This includes invoices, bank statements, wage details, debtor and creditor details, stock on hand records, fuel tax credit calculations, business activity statements and the working behind them etc.

For some items this is from the time the transaction took place. However for employee superannuation and fringe benefits it is from the time you lodged the form or made a contribution. If your business is run by a company structure the ASIC requires that you keep records for seven years. If unsure use the seven-year rule. Any documents in relation to capital items that you acquire should be kept for five years after you sell or dispose of the item. So keep a separate file for property purchases and the like.

These documents can be stored in physical form or in digital form as long as you can produce a readable copy, in English, if requested. It is important to keep this storage safe from harm from fire, flood and rodents. It can be expensive and time consuming to reconstruct all your documents if disaster happens, and could mean that some deductions are disallowed.

If keeping digital copies, you should make regular backups and store them in a safe place preferably away from the business premises or use cloud storage such as Dropbox. Many of the cloud cashbook programs allow you to attach copies of invoices etc to the transactions. Xero cashbook has an app which takes a photo of the receipt and emails it direct to the program.

Everyone has a different preference on how they file i.e. date order, by quarter or alphabetically. No one method is correct, but I would recommend that you at least keep the whole tax year together to make the clean-out easier when it comes time to destroy them. If the ATO comes auditing they will either request to see documents from a whole year, if it is an income tax audit, or the relevant month or quarter if it is a GST audit.

  • Helen Warnock is a partner in a Central Queensland chartered accountant firm. This article offers general information only. You should consult your personal adviser to seek advice relevant to your personal circumstances before taking action.
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