Let’s face it—record keeping isn’t the most exciting part of running a business. But it is one of the most important. And if you’re a sole trader, freelancer, or small business owner – keeping your records in order isn’t just about “doing the right thing” – it’s about protecting your cash flow, reducing stress at tax time, and staying on the ATO’s good side.
What Records Do I Need to Keep?
The ATO requires you to keep written evidence of all your business transactions. This includes:
Income Records:
- Sales invoices
- Cash register tapes or point of sale reports
- Online sales records (e.g. Etsy, Shopify, Square)
- Bank statements showing income deposits
Expense Records:
- Tax invoices for purchases over $82.50 (including GST)
- Receipts for business expenses (fuel, office supplies, subscriptions)
- Employee wages and super records (if you have staff)
- Vehicle logbooks (if claiming car expenses)
Other Key Records:
- Bank and credit card statements
- Lease or rental agreements
- Loan documents and asset purchases
- BAS records if you’re registered for GST
- PAYG withholding and super payments
- Documentation for grants received
Tip: You must keep these records for at least 5 years from when you lodge your tax return (or from when the relevant activity took place).
What Makes a Tax Invoice Valid?
If you’re claiming GST or are registered for GST, a valid tax invoice is essential for both you and your clients.
Here’s what a valid tax invoice must include for sales over $82.50 (inc. GST):
- The words “Tax Invoice”
- Your business name or trading name
- Your ABN
- The date of issue
- A description of the goods or services
- The price, clearly showing the GST amount (or that it’s inclusive)
- The buyer’s identity or ABN (only needed for invoices over $1,000)
If you’re issuing invoices under $1,000, you don’t need to include the buyer’s details—but all the rest still apply.
Not valid:
- Handwritten receipts without a business name
- “Cash sales” with no ABN or GST shown
- A total amount only, with no breakdown
Pro tip: Using invoicing software like Xero, MYOB or even a good Excel template can help make sure every invoice hits the mark.
How Clean Records Save You Time (and Sanity)
Messy records mean:
- Missed deductions
- Scrambling at tax time
- Risk of ATO penalties
Organised records mean:
- Smoother BAS lodgements
- Clear business insights
- Less stress if you’re audited
Keep Payroll Records for 7 Years
If you employ staff (including casuals), you need to keep payroll records for at least 7 years, as required by the Fair Work Act 2009.
This includes:
- Employment contracts
- Employee details (name, start date etc)
- Hours worked (for casuals and permanents)
- Pay rates and gross/net amounts
- Deductions and loadings
- Leave balances and leave taken
- Super contributions
- Termination details (if applicable)
These records must be in English, kept securely, and be accessible if Fair Work ever comes knocking. We will always recommend keeping these records digitally in a secure, confidential location indefinitely as issues may arise outside the 7 year timeframe where you need to refer back to these records
MYBOOKWORKS Tip: Make Record Keeping Easy
If you’re still keeping paper receipts in your glove box (no judgment!), it might be time to upgrade.
Here’s what we recommend:
- Digital storage – Snap receipts into Dext, Hubdoc or another like system that is compatible with your accounting software
- Regular review – Block out a weekly admin hour to stay on top of it
In Summary
- Keep every invoice, receipt, and proof of payment
- Make sure your tax invoices include all required fields
- Keep records for 5 years (7 years at least for payroll)
- Use digital tools where possible
- Back it all up – the cloud is your friend
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