Record Keeping

How to keep records beautifully filed and save money

Some of us love keeping records beautifully and systematically filed. Some of us loathe it, it’s just another distraction from business and life!

What exactly is record keeping?

Record keeping will normally include a document relating to a transaction (eg. Receipt, contract, invoice) and a method/system to store and record the transaction.

Why should records be kept?

Taking the time to keep good records can be a really good investment. Here are some benefits:

·      ATO requirement – The ATO requires your records to be kept in an accessible form for five years. 10 years for other documents including SMSF minutes of meetings, reports to members, etc.

·      Warranties – Need to find a receipt for a warranty claim? A good record keeping system can be just the answer – search and find 

·      Track deductions – Keep track of deductions for tax time and have supporting documents easily accessible.

·      Save $ - Preparing Activity Statements, Financial Accounts, and Tax Returns is a lot quicker and easier if records have been kept up-to-date and contain supporting documents (eg. Receipts).

·      Pulse check – With up-to-date records you can run a P&L or Balance Sheet at any time to review your business performance. This is especially handy around key events such as campaigns. You’ll be able to better monitor performance.

·      Cashflow certainty - Track liabilities and receivables so you can have more certainty over your cashflows.

·      Need a loan? – Demonstrate your financial position to banks or other lenders.

·      Sale of assets – Working out capital gains and losses is a lot easier when records are easily accessible.

How to keep records

You can keep records electronically or manually. Documents should be stored in a secure and easily accessible safe place, and ideally be backed up. A record of transactions may not be required for small business ventures, but some form of transaction recording would be greatly beneficial (eg. Tracking expenses in a book, Excel or bookkeeping software).

Manual record keeping can be as simple as having a shoe box filled with receipts (generally not really the answer though…) for each financial year through to systematically filed documents in a filing cabinet.

Electronic record keeping could be the use of a cloud drive to store documents and tracking transactions in Xero, or even using Xero to attach documents to transactions – all in one place!

Benefits of electronic record keeping

Electronic record keeping is used by most businesses. Benefits include:

·      Structure and System – Using a cloud bookkeeping system provides integrity for your records and a process to help keep your records complete and accurate.

·      Cashflow – Up-to-date records provide better information for cashflow management.

·      Time saving – Automatic bank feeds into finance system means less time inputting records.

·      Less physical clutter – Documents can be scanned and stored electronically. The original document does not need to be kept so long as the electronic version is capable of verification, accessible and understandable.

·      Mobile expense coding – Waiting for someone or something? Using your smart phone, you can categorise your expenses whilst waiting :) You can even take pics of your receipts and record them on the fly!

·      Automation – Simply way to create Activity Statements, file Single Touch Payroll reports, invoice payment reminders, etc. 

If you would like to learn if your record keeping processes and system is giving you the best bang for your buck, get in touch with OAK today! We’ll happily have a chat with you to discuss – for free :)