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 The ATO has developed new tools to help small business (with turnover of less than $2 million) keep better records, both paper and electronic.
Developed in consultation with small businesses, tax agents and bookkeepers, the Tax Office has developed the Record-keeping for small business guide, the Record-Keeping Evaluation Tool and e-Record, a free downloadable electronic record-keeping system.
The Guide
The Record-keeping for small business guide helps identify what records you need to keep, as well as outlining a guide to basic paper record-keeping. It also provides information about the records you need to prepare BAS statements, annual tax returns and other tax obligations. The guide offers practical examples of forms to help meet your record-keeping obligations.
By law, we are required to keep records for five years. You need to keep records relating to income tax and GST, which include sales records (invoices, vouchers, receipts, credit card statements and register tapes, account statements); purchase/expense records (invoices, receipts, cheque butts, credit card and bank statements); and year-end income tax records (motor vehicle expense, debtors and creditors list, stocktake sheets, depreciation schedules, capital gains tax records).
You will also need to keep records relating to employees. The three main obligations for businesses include PAYG withholding records (tax file number and withholding declarations, payment records, PAYG payment summaries, annual reports) as well as superannuation contributions and fringe benefits tax records.
Finally, businesses must keep PAYG business payment records. For this you will need to keep withholding records relating to amounts withheld where no ABN was quoted; and copies of PAYG voluntary agreements, PAYG summaries, annual reports.
The guide also offers tips on a basic paper record-keeping system for recording daily sales, managing cash books and bank reconciliation statements, complete with sample forms.
For a copy of the guide, contact the ATO or download a ‘pdf’ version from the ATO website at www.ato.gov.au/businesses and enter ‘record keeping checklist’ into the search field.
Measuring Tools
The Record Keeping Evaluation Tool—downloadable from the internet*—is a two-step process designed for those thinking of starting a small business, those responsible for keeping the records for their business, and those who manage the records of other businesses, such as tax agents or bookkeepers.
The first step involves answering questions about the management of your business records. Based on your answers, a checklist is compiled of the typical records you should be keeping for your business.
The second step questions what records you are currently keeping and will evaluate how well you maintain your business records to meet all obligations. If appropriate, the results will include suggestions for improvement.
There are help buttons along the way if you have questions. You can save your completed checklist and evaluation and print it out to help discern areas where your record-keeping is strong or is in need of improvement.
Download a copy of the tool from www.ato.gov.au/businesses and enter record keeping evaluation tool’ into the search field.
E-Record System
The ATO has also developed an electronic record-keeping tool to help businesses be more efficient in keeping records electronically. It has been designed for businesses that use a cash basis of accounting, paper-based record-keeping, and one bank account. It may also be useful to try before using similar commercial software products.
E-Record makes it easy for businesses to prepare activity statements and reduce the risk of making calculation errors. As well as there being less paper storage, e-Record also helps you monitor cashflow and make informed business decisions.
Because it is tax agent friendly, e-Record can easily be used with your accountant or tax agent. When you take your electronic records to them, they simply need to download the software on their computer to view your records. The latest version allows you to export data into programs such as Microsoft Excel, which may assist your tax agent.
Download a copy of e-Record from www.ato.gov.au/businesses and
enter ‘ e-Record ’ into the search field.
E-Record enables you to: |
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What doesn’t it provide? |
- prepare your data for activity statements
- lodge your activity statement electronically
- prepare tax invoices
- do a bank reconciliation
- record payments to your workers
- keep records for more than one business
- obtain a summary of income and expenses to assist in preparing your tax return
- reconcile daily sales recorded on your cash register
- easily create a back-up of your data
- easily export data from your cashbook and summaries.
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The ability to download data from your bank is not included as it is not an online product
We can’t access your information as the records you keep using e-Record are stored on your computer
It does not include debtors and creditors reports, balance sheets, profit and loss statements, or inventory control as e-Record is a record-keeping product rather than an accounting product.
Note : If you require these functions you may need a commercial accounting product. We encourage the use of these products. Please visit our Registered Software Facility Product Register at www.ato.gov.au/rsf/business for a list of products that meet our requirements.
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Source: Dynamic Business Magazine
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