Bookkeeping tipsfor small business

Based on tax office’s guidelines for small business operators

Agenda

This presentation explains what business records you need to keep and outlines a basic bookkeeping system.

Keeping good business records

Legal requirements -- By law, you must keep business records:

for five years after they are prepared, obtained or the transactions completed, whichever occurs latest

in English or in a form that we can access and understand in order to work out the amount of tax you are liable to pay.

Keeping good business records

Other reasons for keeping good business records are to:

make it easier to complete your activity statements monitor the health of your business help you to manage your cash flow demonstrate your financial position to banks or

lenders make best use of your tax adviser show the basis for any amendments you need to

make to activity statements or tax returns

Record keeping evaluation tool

ATO has developed an electronic tool to help you evaluate the record keeping needs of your business. You can use this tool if you are:

thinking about starting a business in business and responsible for keeping the

business records responsible for managing the records of small

businesses; for example, you are a tax agent or a bookkeeper.

For more information, download the record keeping evaluation tool from ATO website at www.ato.gov.au/business

Electronic record keeping requirements

As with paper records, you must keep electronic records:

for five years after they are prepared, obtained or the transactions completed, whichever occurs latest

in English, or in a form that we can access and understand order to work out how much tax you are liable to pay.

Lost or destroyed records

In these instances, ATO can allow a deduction to be claimed for certain expenses if either of the following apply: you have a complete copy of a lost or

destroyed document ATO is satisfied that you took reasonable

precautions to prevent the loss or destruction and, if the document was written evidence, it is not reasonably possible to obtain a substitute document.

Income tax records you need to keep

If you are carrying on a business, you need to keep records explaining all transactions that relate to your tax affairs. These records include: sales and expense invoices sales and expense receipts cash register tapes credit card statements bank deposit books and cheque butts bank account statements.

Year-end income tax records

As well as records of income and expenses, you may need to keep the following specific income tax records (if they apply to your business) for each financial year: motor vehicles companies and trusts sole traders and partnerships debtors and creditors lists stocktakes depreciating assets CGT assets.

Sample of car log book

Payment to employees

As a business operator, you have three main obligations when it comes to paying your employees: withhold according to the pay as you go (PAYG)

withholding rules in relation to payments to employees

pay super contributions to a complying super fund or retirement savings account on behalf of eligible employees, directors and contractors, and offer eligible employees a choice of super fund

provide payment summaries for salary, employment termination payments, and reportable fringe benefits amounts.

PAYG withholding

Under the PAYG withholding system, you must withhold amounts from payments such as: salary or wages to employees remuneration to company directors retirement payments, termination of

employment payments, annuities, and benefit or

compensation payments.

Fringe benefit tax (FBT)

FBT is a tax paid on certain benefits you provide to your employees or your employees’ associates (typically family members) in place of, or as well as, salary and wages.

FBT is separate from income tax and is based on the taxable value of the various fringe benefits provided.

The FBT year begins on 1 April and ends on 31 March.

Keeping track of your transactions

The first thing you need to do is to make sure the invoices you receive from other businesses contain all the information you need, especially tax invoices. Check that all invoices quote a valid ABN and, if they are

tax invoices, that they contain all the requirements for a tax invoice. Remember, you generally can’t claim GST credits for your business purchases unless you have a valid tax invoice. Also, make sure the invoices you issue from your business contain the required information for a tax invoice.

Make sure you record enough information on the cheque butt-date, payee, and details of goods or services purchased, if you use cheques to make business payments.

Find more information on ATO website

Record keeping for small business Download link on

http://www.ato.gov.au/download.asp?file=/content/downloads/BUS76494nat30290511.pdf

Who is W Advisory?

We are your Sydney Accountant and Tax Specialist.

We are based in Sydney, Campbelltown and Perth, ready to support small businesses in your local area.

Our services include: Accounting and Tax Advisory Cloud-based Business Solutions MYOB Services

For advice on bookkeeping services, contact us for more information

W AdvisoryPO Box 27, Macarthur Square, NSW, 2560

Phone : 0410 491 591Fax : 02 8007 0484

www.wadvisory.com.au