Why Good Record Keeping Is Crucial For Business

Why Good Record Keeping Is Crucial For Business

Tax time comes around every year, yet it still catches many businesses ill-prepared. Perhaps you’ve been meaning to get your paperwork in order all year, but never got around to it. Or maybe you’re not sure of your legal obligations. Either way, poor record keeping can get you into hot water!

Efficient record keeping is vital for all aspects of your business. But let’s start by looking at the Australian Taxation Office’s requirements.

Record Keeping For The ATO

The ATO prefers you to keep all records in an accessible form, for five years. So that might be a digital filing system, or hard copies.

Some of the documents the ATO might need to see include:

  • Financial Reports: Annual budgets, financial statements, audit reports, reconciliations, accounts received and accounts payable.
  • Cash Book Records: Daily receipts and payments.
  • Governing Documents: Deeds, Constitution, Trust documents etc.
  • Invoice and Tax Records: Creditors and debtors list, motor vehicle expenses, stock-taking records.
  • Bank Records: Statements, bank books.
  • Employee Records: PAYG paperwork, TFN declarations, superannuation etc.
Staffing Records

When it comes to staffing issues, good record keeping is essential – particularly when it comes to disputes and compensation. Without them, you’ll get into a ‘he said, she said’ situation that will have no legal standing.

Did you know that when it comes to time and wages record keeping, you can access free templates online? Look here to find timesheets, wage records, leave forms, rosters and more.

At the most basic, employment records should include the employer’s and employee’s names; the employer’s ABN; the employee’s start date, and whether the position is permanent or temporary, full-time, part-time or casual and your employment agreement. Any performance reviews, training or staff meetings should be recorded in writing. If ever there is a disagreement, you can go back to the records.

Avoid Staff Disputes

As far as pay goes, you need to record the pay rate, gross and net amounts paid, any deductions, and any other useful information, such as incentive schemes. Many accounting and payroll systems have these already automatically built-in.

You should also record details regarding superannuation, hours worked, leave and, most importantly, any written warnings. Things do go wrong and you may need to prove you are in the right.

Say you had to dismiss a staff member. The first thing the Fair Work Commission will check is whether written warnings were issued. If you feel an employee has done something wrong, you should first discuss the issue directly with them. Then issue a written warning to confirm what was discussed, and what should happen.

If the problem arises again, you can issue a second letter of warning, before finally dismissing the employee. Litigation can be very expensive, time-consuming and damaging to your reputation, so it is best avoided.

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