Good record keeping is essential for managing your business and cash flow.
As an employer, you are legally required to keep records of all transactions relating to your tax, superannuation and employer obligations as you start, run, sell, change or close your business.
With tax time soon approaching, here are four tips to help you meet your record-keeping requirements and avoid common errors.
1. Keep detailed records of all contractor payments
If your business engages contractors and suppliers, you must keep all records relating to payments made to them in order to claim deductions.
Records you need to keep include contracts or written agreements, invoices, and payment summaries. Read the full list here.
Remember to keep records of all contractor payments starting from when you prepared or received the records or completed the transactions or acts.
2. Make sure your vehicle logbook records are no more than five years old
The records you keep regarding your business’s motor vehicle expenses must be no more than five years old.
Records can include kilometres travelled for business or private use, receipts for fuel, oil, repairs, servicing and insurance cover or loan or lease documents.
A full list can be found here.
3. Check whether any government grants or payments made to your business are taxable
If your business has obtained a government grant or payment, you must check whether the grant is taxable.
Generally, government grants or payments that provide income support to businesses are typically not taxable if you meet the eligibility criteria.
A grant or payment may become taxable if your business is providing something of value, which requires you to do something more than just meeting the eligibility criteria.
More information about GST and grants can be found here.
4. Keep records that show any amounts withheld from payments made to your business
If you have had amounts withheld from any payments made to your business, make sure you hold documentary evidence from the payer that:
- sets out the amount that was withheld, and
- cites the details of the payer, including their ABN.
For more information and support, visit the ATO website.