How Long do You Need to Keep Business Receipts?

No one wants that. This blog will help you answer all related questions in mind when it comes to record-keeping for businesses, helping you make informed decisions, stay compliant, and avoid stress.

Why Keep Business Receipts?

As a business owner, you're legally required to maintain accurate records for tax and compliance purposes. These records document your income, expenses, tax decisions, and calculations. The Australian Taxation Office (ATO) conducts audits to ensure compliance. Not having proper records can lead to penalties, so a good system is essential. Keeping a record of your receipts is essential and arguably the most important way to minimise tax.

What are the Benefits of a Record-Keeping System

• Informed Decisions. Track your business health and make strategic choices based on accurate data.
• Compliance. Meet tax and superannuation obligations effortlessly.
• Financial Strength. Demonstrate your financial position to banks and investors with ease.

‍What Type of Records do you Need to Keep

The specific records you need vary depending on your business size, structure, and industry. However, here's a general guideline:

• Business Income & Expenses: Receipts, invoices, bank statements, and other documents reflecting your financial activity.
• Tax & Super Documents: Records detailing tax calculations, estimations, and super contributions.
• Business Assets: Records of purchase, sale, and other costs of assets like equipment, buildings, or land.
• Banking Records: All bank statements related to your business activity.
• Business Activity Statements (BAS): Records for GST, PAYG, fuel tax credits, and other taxes.
• Tax Returns: Documents related to income, deductions, assets, and personal services income.
• Payroll Records: Employee information, salaries, wages, and super contributions.
• Contractor & Supplier Records: Agreements, invoices, and receipts for contractors and suppliers.

Don't be overwhelmed! This list is a starting point. The ATO provides a comprehensive index to explore specific record-keeping requirements for your business type Index on Record Keeping for Business.

‍How Long do you Need to Keep Records?

The ATO recommends keeping records for at least five years. However, for complete peace of mind, we recommend keeping them for seven years. 

Here's why, incorporating the details from the ATO website:

• Records beyond five years. The ATO website highlights situations where you'll need to keep records for over five years. These include:some text
  • Records connected to an assessment that's amended (you need to keep them for the period of review for that assessment, which is generally two years for individuals and small businesses and four years for other taxpayers, from the day after the ATO gives you the notice of assessment).
  • Records of information used again in a future return (e.g., if you carry forward a business loss and deduct it in a future tax return, keep the records used to work out the loss).
  • Records of depreciating assets (throughout the asset's effective life and disposal).
  • Records of capital gains tax assets (for five years after you dispose of the asset).
  • Petroleum resource rent tax records (as per specific legislation).

Beyond the ATO

While the Australian Taxation Office (ATO) is the primary body concerned with business record-keeping, other governing bodies may have additional requirements depending on your business structure and industry. 

Here are a few examples:

• Australian Securities & Investments Commission (ASIC): Companies registered with ASIC are required to keep certain records for seven years. These records include financial statements, minutes of meetings, share registers, and documents related to the appointment and removal of directors and company secretaries. You can find a detailed list of ASIC record-keeping requirements on their website: https://asic.gov.au/for-business/running-a-company/company-officeholder-duties/what-books-and-records-should-my-company-keep/.
• Fair Work Commission (FWC): If you employ staff, the Fair Work Commission (FWC) may require you to keep specific employment records, such as award or agreement coverage details, employee contracts, timesheets, and leave records. The FWC website provides a guide to record-keeping requirements for employers: https://www.fairwork.gov.au/tools-and-resources/fact-sheets/rights-and-obligations/record-keeping-pay-slips.
• Australian Consumer and Competition Commission (ACCC): Businesses that deal with consumers may have specific record-keeping obligations under the Australian Consumer Law. The ACCC website offers guidance on record-keeping for consumer protection: https://www.accc.gov.au/about-us/contact-us/report-a-consumer-issue.

It's important to note that this is not an exhaustive list. Depending on your specific business activities and industry, additional record-keeping requirements from other government agencies or professional associations may exist. Consulting with a qualified accountant or business advisor can help you determine the specific record-keeping obligations that apply to your business.

Getting Help

Managing records can be easier with the right tools and support. Here are a few options to consider:

An Australian fintech platform like Thriday uses AI to automate banking, accounting, and tax. Thriday can help you with real-time cash flow and tax forecasting, automatic expense reconciliation, and comprehensive reports. Such a big help for anyone looking to streamline their business operations. 

If you'd prefer a more personalised approach, a team of experienced professionals can help you develop a customised record-keeping system and ensure you're on top of compliance requirements. They can answer your questions, guide you through the process, and offer ongoing support. However, here's the trade-off – it does come with an associated cost.