Australian businesses are legally required to keep financial records that:
- correctly record and explain its transactions and financial position and performance; and
- enable true and fair financial statements to be prepared and audited.
The Australian Securities & Investments Commission (ASIC) defines[1] “financial records” as including invoices, receipts, cheques, working papers and other documents needed to explain the methods by which a company’s financial reports are prepared.
ASIC requires companies to keep the above-mentioned financial records for seven years1, which can be easier said than done if you don’t have the systems and processes in place to organise and manage your documents.
Five steps tips you need to know for records management compliance
- Know what records you have to keep
As well as financial records, business owners also need to keep legal records, employee records, policy and procedures records, to name a few. Make sure you’re keeping what you have to keep, and throwing away what you don’t.
- Understand the lifecycle of records
Every record in a business typically goes through a number of stages: creation, access, classification, modification, archive, back-up, and disposal. Understanding this lifecycle will help you build business processes and policies for best practice records management.
- Use free government services
Various government departments, such as the ATO and the Department of Industry, Innovation and Science, offer free online tools to support small business owners on records management compliance. A good place to start is the ATO’s record keeping evaluation tool[2].
- Keep track of your procedures
Note down the procedures you use for filing your records. This will help formalise your processes, and is important because as your business grows you may need to delegate record keeping to a third party.
- Seek an information management professional
Small business owners don’t have to go it alone on records management. Find an information management expert like Compu-Stor that can partner with you to take the pain out of records management.
Embrace digital for records management
Many businesses are trading their filing cabinets and manila folders for solutions that allow them to store, access and manage their records in digital format.
Businesses are able to store their records electronically[3], so long as they are:
- a true and clear copy of the original;
- kept for five years; and
- able to be reviewed by the ATO at any time.
The records must also be on a computer or device that:
- you have access to (including all passwords);
- is backed up in case of computer failure; and
- allows you to control the information that is processed, entered and sent.
Compu-Stor has been helping businesses take the pain out of records management compliance since 1987. Contact us today about how we can help improve your records management processes.
[1] https://asic.gov.au/for-business/your-business/small-business/compliance-for-small-business/small-business-what-books-and-records-should-my-company-keep/
[2] https://www.ato.gov.au/calculators-and-tools/record-keeping-evaluation/
[3] https://www.business.gov.au/news/record-keeping-for-small-business-owners
