Don’t make the mistake of thinking it could never happen to your business. Record Keeping for Small Business is a Top Priority for the ATO. It could be your turn.
If the ATO decides to audit your small business this year you could find yourself spending a lot of time pulling together the requested records and documentation. It can be a stressful process and can take your time away from serving your customers. So, save yourself the future stress and worry and be ready for if and when the ATO decides to audit your business.
Which businesses does the ATO audit?
It could be any business, even yours.
The ATO may decide to audit a business due to discrepancies found in financial reporting such as between BAS and tax returns. However sometimes the ATO chooses to review businesses with certain types of expenses where GST is being claimed or tax deductions. It could be a random selection. Or, the ATO may choose to audit a business if they determine a more in-depth review of the businesses financial position is warranted.
What will a small business need to provide if audited by the ATO?
Detailed business records may be requested. As a business owner you may be called upon by the ATO to provide your business financial records in relation to a prior tax year. The depth of information required can vary.
Generally, records relating to your businesses tax, superannuation and employer obligations will be requested during an ATO audit.
How long do you need to keep your records?
As a rule, you need to keep business records for 5 years. However, there are instances where records need to be kept for longer time periods. As an example, records of depreciating assets, records of capital gains tax assets and records relating to a tax return or document that has been amended may need to be kept for longer than 5 years. There are other instances as well, so be sure to understand the rules on record keeping in detail.
An experienced bookkeeper can assist you to understand how long to retain various records for.
How to ensure your business bookkeeping meets ATO requirements?
Whether you are audited by the ATO or not, having accurate financial records that are well organised will assist you with the successful operation of your business.
Maintaining best practice bookkeeping for your business will ensure you meet the ATO requirements if ever you are audited. The rules and regulations for record keeping does change from time to time so keeping up to date with latest legislation is essential.
The simplest way to stay on top of this is to recruit an experienced bookkeeper and registered BAS agent. They can take care of your bookkeeping in line with current ATO rules and make the process a lot more streamlined in the event that your business is ever audited. Work smarter not harder by utilising the right tools.
Need help to keep your business books on track?
Focus on working on the parts of your business you love AND sleep well at night.
Deb at Your Trade Bookkeeping can help get your business books up to scratch. Click here to see the bookkeeping services we provide.
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