The records you have to keep, and for how long

Five years is the headline. The detail is where businesses come unstuck.

The general rule

Business records generally have to be kept for five years from when you prepared or obtained them, or five years after the transaction or act they relate to is complete, whichever is later. They must be in English, and they must explain the transaction well enough that somebody else could follow it.

Some records need keeping longer

Anything relating to an asset you might one day sell can matter for capital gains purposes long after five years. Purchase contracts, improvement costs, legal fees on acquisition. The clock on those effectively runs from when you dispose of the asset, not when you bought it, which catches out a lot of people who threw out a twenty year old file.

Digital copies are fine, with conditions

You do not have to keep the paper if the electronic copy is a true and clear reproduction of the original and it is stored for the required period in a form that can be retrieved and read. Photographing receipts into your accounting software satisfies this, which is why we set every client up that way.

What counts as a record

• Sales and purchase invoices, receipts and contracts
• Bank and credit card statements and loan documents
• Payroll records, superannuation payments and employee details
• Activity statements and the working papers behind them
• Asset purchase and disposal records, including improvements
• Stocktake records where relevant

Where it actually goes wrong

Faded thermal receipts that were the only copy. A business that changed software and left five years of history in a file nobody can open any more. A phone that was lost with a year of photographs on it and no backup. And the shoebox that got wet. Every one of those is avoidable with capture at the source and cloud storage, which costs almost nothing.

General information only. Record keeping requirements vary with circumstances, so ask us about yours.