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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 can make good business decisions
  • demonstrate your financial position to banks or other lenders
  • meet your tax, super and employer obligations
  • manage your cash flow.

Records you must keep

You must keep records of all transactions that relate to your tax, super and registrations. Your records must be in English or able to translate easily into English.

Records you need to keep include:

  • records of all income and sales transactions
  • records of all business expenses, including cash purchases
  • end-of-year records, including lists of creditors (people you owe money to) or debtors (people that owe you money)
  • records of all expenses related to your assets or stock
  • bank records
  • goods and services tax (GST) records, if you have registered for GST
  • fuel tax credit records, if you’re claiming fuel tax credits
  • employee and contractor records.

Other records you must keep can depend on your business structure.

It’s a good idea to check the record-keeping rules of all organisations you deal with.

Record keeping evaluation tool

Use the Australian Taxation Office’s (ATO’s) free tool to check which records your business needs to keep and how well you’re keeping them.

Go to the tool

How to keep records

Consider digital record keeping

You can keep digital or paper records. The Australian Taxation Office (ATO) recommends that businesses use digital record keeping if possible. The ATO is moving towards digital reporting for tax and super.

Keeping digital records will make some tasks easier and save you time once you have your system set up. If you keep digital records, you don’t need to also keep paper copies unless a particular law or rule says you must.

You can also store and keep paper records digitally. The ATO accepts electronic images of paper records if the copies:

  • are a true and clear reproduction of the original paper records
  • follow record-keeping rules.

Once you have saved an image of your original paper records, you don’t need to keep the paper versions.

Keep them in a secure place

Whether you have digital or paper records, you must store them in a way that prevents any change or damage to them.

Back up your digital records and, if possible, have a secure off-site storage location. This may include cloud storage.

Digital records must also be on a computer or device that you:

  • have access to (including all passwords)
  • have backed up in case of computer failure
  • control the information on (the information you process, enter and send).​

Choose a good bookkeeping system

Manual bookkeeping systems use a series of books or ledger accounts. You can often get these from your local newsagent, office supply or bookstore. 

Some advantages of a manual system:

  • cheaper to set up 
  • less likely that data will become corrupted 
  • a simpler system if you’re not familiar with accounting software 
  • avoid duplicate copies of the same records.

The Australian Taxation Office (ATO) is moving towards digital records. So now is a good time to go digital.

Some advantages of digital record keeping:

  • less physical storage space than a manual system
  • automatically calculates amounts
  • easy to generate reports
  • easy to back up and keep safe from fire or theft.

Your digital options include accounting software, web-based systems and spreadsheets.

Off-the-shelf or tailored software accounting packages help you:

  • record your transactions
  • calculate goods and services tax (GST)
  • update ledgers
  • prepare financial statements
  • generate invoices.

Check what software your accountant or business advisor recommends. Make sure the software complies with Standard Business Reporting (SBR).

A web-based or cloud system:

  • lets you update your books from any location
  • provides automatic off-site storage for your financial records
  • can be a cheaper digital option.

However, it does have security risks.

Find out about the cloud computing software service on the ATO website.

Are you confident using a computer, but don't have the funds for an accounting package? Consider setting up spreadsheets for your accounts.

Visit the ATO website for more information on manual and digital record keeping systems.

POS systems are computer systems that help you process sales and can support record keeping.

Depending on the system you choose, POS systems can automatically:

  • adjust sales income and inventory records
  • create receipts, invoices and tax invoices
  • process EFTPOS and credit and debit card sales.

Think about the features your business needs before buying a POS system.

How long to keep records

You need to keep most business records for 5 years. This period starts from when you either got the records or completed the transactions or actions they relate to, whichever is later.

You must keep some records for longer than 5 years. For example, you need to keep company records and some employee records for 7 years.

Record keeping app for sole traders

If you’re a sole trader, you can use the Australian Taxation Office's (ATO's) myDeductions tool to record your:

  • business income
  • expenses
  • vehicle trips.

At tax time you upload your data to pre-fill your tax return or email it to your tax agent.

If you don't keep good records

You need to show the Australian Taxation Office (ATO) your records if they ask for them. If the ATO finds an error in your records, you may have to:

  • pay financial penalties
  • complete a record-keeping course.

Learn what to expect if you do not follow record-keeping rules on the ATO website.

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