Thursday, 4 Jan 2024
Records are the historical evidence of events in a commercial organisation. While some records are needed to gather data for internal controls, others are needed to comply with legal regulations. Every Australian business has to maintain its financial records that help them comply with tax obligations.
It is also helpful in budgeting and forecasting to manage a positive cash flow and keep the profits high. Entrepreneurs must provide these records to moneylenders and banks to secure loans for business growth. These are also needed when they plan to sell their business and attract buyers who conduct due diligence on the venture.
Thus, professional bookkeepers are hired to gather this data, report it accurately and avoid legal repercussions. So, here is everything you need to know about the type of records businesses need to keep. It ensures that you are abiding by the law and can determine the financial health of your entity at any given time.
Entrepreneurs in Melbourne or any other city or suburb should keep details of every business transaction to provide this information to the Australian Taxation Office in the form of reports and tax returns.
The financial records that must be stored depend on the business structure, such as sole trader, partnership, company or trust. The business structure helps to determine its tax and superannuation responsibilities.
Qualified Bookkeepers Melbourne play a significant role in this regard by following the guidelines issued by the ATO for the maintenance of these records. The data must be stored safely without making any alterations and should be protected from breaches and violations.
Since most businesses store confidential financial information digitally, they must protect it with the help of a stringent cyber security protocol. The workforce must be trained in maintaining the safety of the information, and the business owner should keep a data backup on the cloud to save it from natural disasters and unforeseen events.
The records must be stored for five years from the date of preparation or when the transaction took place. The older documents should be easily accessible so they can be provided to the ATO whenever required.
They should preferably stored in English and must be easy to translate to English if stored in any other language. Bookkeepers use the recordkeeping evaluation tool to determine the records that the business must create.
The ATO can ask for any of the following records from business owners in any part of the country:
The financial records Melbourne bookkeepers maintain include sale invoices, payment receipts, bank statements, tax returns, business activity statements, business loan payments, asset purchases, and financial reports. Proof of business expenses is also required to claim tax deductions.
Businesses must also keep their legal records, including commercial lease agreements, contracts with suppliers, contracts with customers, business registration documents, and insurance papers.
The ATO may require information related to payments made to the employees in the form of salaries and superannuation. Thus, the business owner must keep all the details related to the workers stored in the data backup, such as employee attendance, payroll expenses, allowances, super contributions, superannuation account details, employee performance, etc.
Every business must create a record of its policies and processes that must be communicated to the workforce effectively. They must comply with the legal obligations and be updated as per requirements. These include sexual harassment policies, privacy policies, workplace health and safety, operations manuals, etc.
When businesses hire seasoned Melbourne bookkeepers, they can rest assured about the reporting and recordkeeping requirements. However, the entrepreneur must be aware of the obligations set down by the ATO for the process.
According to the regulations, the details of the transactions can be stored in the form of paper or electronic bills and invoices. It is better to use the digital medium because it helps with Single Touch Payroll and activity statement reporting.
The time-consuming bookkeeping tasks can be easily automated with the help of accounting software that fosters accuracy. Businesses can also take pictures of the paper bills and store them digitally. However, the bill or invoice details must be clearly visible and readable. In this case, the paper bill is no longer required.
The digital records should be stored in a computer or laptop secured with anti-virus and strong passwords. The devices must use a protected network that should not allow unauthorised users and traffic to access the data.
Businesses that own capital assets, which can make the entrepreneur responsible for paying capital gains tax, should maintain the records for seven years. Bookkeeping software helps store the information for a long time without worrying about finding a physical storage space.
It performs the calculations correctly and generates financial reports for submissions. The software even provides the advantage of e-invoicing, payroll management and inventory management. Thus, bookkeepers in Melbourne prefer using these modern digital tools to comply with legal regulations.
Record keeping is an integral part of bookkeeping. It is essential to abide by the legal obligations and keep the historic business data safe and organised. Entrepreneurs must seek professional help to determine the records they need to keep and stay on the path to success.
