Good records give you a clear overview of your business growth and help you lodge your legal requirements on time. Keeping in mind these record-keeping best practices will ensure you’re always on track with your key requirements and responsibilities.
Stay on top of your finances by observing these record-keeping best practices:
If you’re still using manual bookkeeping, now’s the time to move your financial records online. Doing so will not only help you save resources — time, money, and effort — but would also give you an extra layer of security and convenience.
In particular, we recommend the use of cloud accounting software in storing and organising your records. Most accounting software can generate customer invoices and record accounts receivables.
One of the best things about this is its automated features. With this, you don’t need to manually enter your data anymore.
A practical application of it would be:
Integrating your bank account into your software. This way, your sales data, income, or purchases will be automatically transferred to your cloud accounting software. There’s no need to transcribe these data for hours and risk the chances of data entry errors.
The top cloud accounting software for most businesses and accounting firms include the following:
Using legacy software and/or Excel spreadsheets in organising record-keeping requirements is still possible. However, you might encounter several limitations with these options.
A legacy accounting software, for instance, requires a bigger budget for installation, maintenance, and updates. Because it’s installed directly on your computer, you may not be able to access your data outside the office. It will also become outdated over time, requiring you to shell out more money to get its updates.
Utilising Excel for record-keeping, on the other hand, is time-consuming. Users must also possess extensive knowledge of this software to maximise its automated functions. Include to this the risk of data entry errors which could bring financial damages to the company.
The Australian Taxation Office (ATO) recommends the use of the myDeductions tool for sole traders. This free tool provides an easy and convenient way to record income and expenses, including images of invoices and receipts. You can also use this for some tax-related matters.
Because it’s a free service, its features are not as extensive as any cloud accounting software.
A good document and records management system promotes operational efficiency and minimises bad data.
Document management pertains to your daily data capture, storage, modification, and file-sharing using a cloud-based system. Its goal is to speed up document approval and automate repetitive tasks to reduce manual data entry.
Records management, on the other hand, refers to your organisation’s policies and standards in managing different types of records. To establish a good records management system, it’s vital to:
The ATO requires businesses to keep most records for at least five years. This includes the following documents:
Some records, meanwhile, must be kept for a longer time. These are the:
Keeping your records online keeps it safe from physical threats. However, it may still be at risk of data breaches. Creating a disaster recovery plan can strengthen the security of your sensitive data.
Above all, the best record-keeping practice is to keep yourself informed of the official guidelines from the ATO.
Aside from the five-year rule, here are the other record-keeping requirements set by this revenue collection body:
You can also visit ATO’s official website to learn more about their record-keeping guidelines.
Adapting these record-keeping best practices in your entity gives you a transparent picture of your business’ health, manage your cash flow better, make good business decisions, meet your tax and super obligations, and demonstrate your financial position clearly to banks and investors.
And if you ever need help in organising your financial records, you can rely on D&V Philippines. Our CPAs use the latest cloud accounting software and follow record-keeping best practices. You can get in touch with us today or read our whitepaper, Finding the Right Talents: D&V Philippines’ Solutions to Modern Accounting Firms, to learn more about our services.