The end of the financial year (EOFY) is near, and tax time is just around the corner. With tens of thousands of businesses saddling up to zone in on their finances and ensure that every single digit is in sync, there is no period tenser than now.
As firms rush to get their tax affairs in order and the Australian Tax Office (ATO) continues to conduct spot audits each year on tax compliance, any decision-maker is urged to be snappy with their numbers. Unfortunately, most companies fail to heed the call for compliance and find themselves dealing with fines and penalties.
With the EOFY on the horizon and tax time converging with it, chances are you’re preparing your firm at all costs. Of course, every business wants to make all the necessary adjustments to minimize risks.
Among all the different factors that you’ll need to account for during the process, however, there’s one aspect that you need to take care of above all else: your business records.
Why Business Records Are Crucial For Compliance
Regardless of your business setup and industry, recordkeeping is one thing you should always keep an eye on. Through rapid advances in technology, the ATO has managed to improve its data-matching capabilities. This means that they are more sophisticated than ever in terms of both standards and compliance. Regulators have more opportunities to catch your mistakes when it comes to accounting and tax obligations.
For Financial Year 2021 (FY21), the ATO has begun urging small businesses to make their records are up to date. Good recordkeeping will help you avoid complications that may arise out of rising standards and lower margins for error.
Thankfully, ensuring that all your records are up-to-date won’t be such an uphill battle if you consider the right factors.
What Business Records Should You Keep?
As a small business owner, your tax compliance largely depends on knowing what records to keep track of. It’s important to keep an eye on the records that support the information you provide regulators when you make your tax returns and reports.
The nature of the records you keep will depend on your business structure because specific structures have varying report requirements. Whether you’re a sole trader, corporation, partnership, or trust, it’s vital to understand what records the ATO will expect from your business. It’s also best to have an expert like The ECommerce Accountant help you out.
How Long Should You Keep Your Business Records?
In terms of record-keeping standards, influencers and online businesses don’t differ from traditional companies when it comes to the required duration at which records are kept.
Currently, the ATO requires businesses to keep most of their records for five years. Maintaining documentation ensures easy access for referencing in case certain concerns pop up in the future. Firms should keep all financial records in a safe and secure area that cannot be easily damaged or tampered with. Financial records that are not written, updated, or maintained in the English language must have the capacity to be easily translated.
What’s the Recommended Form for Business Records?
Lucky news for eCommerce businesses, online firms, and influencers: the ATO is urging businesses to stick with electronic record-keeping as reporting increasingly goes online.
E-bookkeeping is a great way to ease your calculations, compliance, reporting, and forecasting. It also fits well with recently implemented guidelines. Fortunately, you won’t have to worry about maintaining your records or transitioning to online bookkeeping because this is where an expert like The ECommerce Accountant can help you!
When it comes to ensuring that your business is compliant with the ATO’s standards, it’s critical to keep an eye on your recordkeeping. Consider all the key points mentioned above, and you can ensure you won’t end up running into unforeseen difficulties along the way!
We’re an e-commerce accounting firm that assists big companies, online start-up businesses, and influencers all over Australia. Get in touch with us today to learn more about how we can help you stay up to date and on track with your finances!