This article was written by Emile Koskinas, CPA Qualified Accountant and Director at iPitch’s Accounting and Bookkeeping Partner, Your Empire Business Services.
Following from our previous article covering the need to set-up accurate accounting and bookkeeping practises from the start of a business, we will now discuss the requirements in relation to compliance.
For most start-ups turning over less than $2 m per annum, compliance revolves around your statutory taxation obligations and company reporting requirements.
Most importantly, you are not required to register for GST if you turnover is less than $75,000 per annum. Generally, this means you don’t collect GST on your invoices and you can’t claim back GST paid on costs. This does not mean however that your compliance requirements are nil!
- by law, you must keep business records for 5 years, and longer if you use information from those records in a later tax return
- they must be in English
- they can be stored electronically or manually
Business records you must keep:
- Income tax and GST
- Sales invoices
- Sales vouchers or receipts
- Cash register tapes / credit card statements
- Bank account statements and deposit book
- Purchase/expense records
- Purchase/expense invoices
- Cheque butts
- Records to show how you worked out any private use
- Year-end income tax records
- Motor vehicle expenses
- Debtors and creditors lists
- Stock take sheets
- Depreciation schedules
- Capital gain tax records
- Payments to employees
- Tax file number and withholding declarations
- Worker payment records
- PAYG payment summaries
- Annual reports
- Super records
- Records of any fringe benefits provided
- PAYG withholding
- Amounts withheld from payment where no ABN is quoted
- Copies of PAYG withholding voluntary agreements
- Records of voluntary agreement payments
- All PAYG payment summaries and termination payments
Here are some tips to keep you on top of your record keeping - and some traps to avoid.
- Get organised and stay organised.
- Decide what record keeping system works best for you.
- Set up a good filing system for your paperwork. A good filing system will help you follow up overdue debts and know when your accounts are due to be paid. This will help you manage your cash flow.
- Make sure your records can be understood by anyone, not just one person.
- Obtain the required paperwork from suppliers and customers at the time of a transaction and record details as soon as possible - don’t leave it until later.
- Make sure your records contain enough information; for example, tax invoices with all the required information and cheque butts correctly filled out. It’s a good idea to cross-reference records; for example, when you pay bills, write the invoice number on the cheque butt and the cheque number on the invoice.
- Get into the habit of entering transactions into your cash books or software program regularly to keep your files up to date. Never leave record keeping until the end of the year.
- Make sure you enter transactions correctly into your cash books - mistakes can be costly.
- Don’t mix up personal and business paperwork; for example, by using business bank accounts and credit cards for personal transactions and vice versa.
- Ask for help before things get out of control. Engage a bookkeeper to set up your books or set up a software program.
The perception is that all this compliance can be a burden to the budding start-up entrepreneur; however, it also serves to provide accurate information to stakeholders to evaluate the performance of the business and its viability.
Standard Business Reporting (SBR).
SBR aims to reduce the business-to-government reporting burden. This major whole-of-government project streamlines business-to-government reporting through their SBR-enabled accounting/payroll software.
The following link provides a comprehensive outline of what processes SBR covers: https://www.sbr.gov.au/content/public/business
In our next article, we will look at what makes best practise accounting and bookkeeping.
If you are a business looking for accounting and bookkeeping assistance, contact Your Empire Business Services, iPitch’s Accounting and Bookkeeping partner who specialises working with startups, small businesses and entrepreneurs.