As an owner of your business, you are used to doing a lot of duties to keep it running. However, running a business can be very unpredictable because it depends on a wide range of factors like economic situation, market value etc. But, if you have the habit of keeping records in a proper way, you are bound to get numerous benefits from it, no matter what situation arises.
What are the benefits of keeping records for your business?
Keeping records can make you control your business activities quite easily and smoothly. Here is a list of benefits that you may get from record keeping.
1. Make good business deals: Keeping records will make your business quite healthy, thus will enable you to make effective and brilliant business deals.
2. Meet tax obligations: A good record keeping will let you meet tax and superannuation obligations.
3. Manage cash flow: It will also make your cash flow smoother.
4. Demonstration of financial condition: It will be helpful in demonstrating your financial condition to banks or other lenders.
What tax and superannuation records you must keep?
You should keep all the records related to transactions made in the tax and superannuation affairs of your business. That will also include the information that you include in tax return files. These records will depend on the tax and superannuation obligations that are associated with your business and also the structure of the business (whether it is sole trading or partnership or joint venture). The requirements of the Australian Taxation Office are:
1. There should be no change in the records. Also, the records should be kept in such a way that information gets restricted so that no one can alter it or damage the records.
2. You need to keep the records for five years. The count starts from the time of preparation or obtainment of the records, or completion of transactions.
3. If ATO asks for the records, you must show those to them.
4. The records must be written in English. If the records are written in any other language that must be converted to English as English is the working language of Australia.
For tax-related queries in Perth, you can consult with a BAS agent Perth, who can provide you with detailed information related to GST and other taxes. It is also highly recommended to see the record-keeping requirements of all the organizations you generally deal with.
What are the legal requirements for keeping records?
There are certain legal requirements that you should obey.
1. You should explain all the transactions in your kept records.
2. The records should be submitted in a written form. That may be in paper or in electronic format.
3. The writing language should be English.
4. You have to keep the records for a minimum of 5 years. Sometimes, the records need to be kept for more time too, especially if your business owns capital assets that are subject to capital gains tax.
How do you keep your records?
The records are kept either in paper or in electronic format. This is an era of digitalization, where most companies prefer a more electronic medium for taxation and superannuation obligations. So, for businesses, now it is recommended to keep your records in electronic form. Keeping records electronically is also helpful in the sense that it makes the task easier and also saves some more time if your system gets set up. If you save your records electronically, you need not show any paper documents, unless any specified rule or law requires it.
If you have paper records that are old, (maybe from the time when electronic record-keeping could not be possible) you can keep an electronic record of those. ATO allows image copies of business paper records which can be saved on an electronic device. Those documents can only be accepted if they are clearly just like their paper counterparts and meet ATO requirements. If you save your electronic copy of your paper record, you do not need to keep the paper records any more.
Whether you will choose paper or electronic format that is completely in your hand. Whatever may be the medium, you must make sure that it is kept in a much secure place. For electronic format, you may keep that in a secured storage, say cloud storage. You should also keep in mind that the computer or the electronic device, in which you are keeping the records, must be accessible to you. You should always create a back up of your records so that they are not lost in case of computer failure.
What are the different kinds of book-keeping modes you can choose?
We have already talked about electronic and paper-based book-keeping. Here are given some different kinds of book-keeping systems which you can choose depending on your convenience. Those are:
1. Manual book-keeping: Manual book-keeping systems involve the use of books or ledger accounts. You can easily get these from a local newsagent, book store or office supply. These are cheaper to set up. There is much less probability that the data you will use will get corrupted. If you’re not familiar with accounting software, this system is suitable for you. Duplicate copies can also be easily avoided.
2. Electronic book-keeping: It is wise to start keeping records electronically now because the current situation demands that. In the case of electronic keeping, much less physical effort is involved, relative to the manual one. It can easily calculate amounts for you. Reports can also get generated quite easily. And most importantly, you shouldn’t be afraid of any loss of records in case of a fire.
3. Accounting software: Software accounting packages come very handy in certain senses. It can update ledgers, generate necessary invoices, record your transactions, calculate the GST and prepare financial statements as well.
4. Web-based book-keeping: A web-based or cloud-based book-keeping can be very useful when you want to update your books from any location. It provides automatic off-site storage where you can keep your financial records. As a digital option, it is much cheaper.
If you’re from Perth and want to know more about different modes of book-keeping and financial advice, you can contact related organizations. They can provide you with good and experienced bookkeepers in Perth.