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Record Keeping for Small Business: What the ATO Expects

MC TAXATION & BAS SERVICES — Registered Tax & BAS Agent 5 min read Updated for 2025–26

Good records are not paperwork for its own sake. They are what lets you claim every deduction and GST credit you are entitled to — and what protects you if the ATO ever asks a question.

Here is the short version of what to keep, for how long, and the habits that make each BAS a 20-minute job instead of a lost weekend.

Records every business should keep

  • Sales records: invoices, receipts, point-of-sale summaries and bank deposits
  • Purchase and expense records, including tax invoices for GST credits
  • Bank and credit card statements for every business account
  • Payroll records: wages, PAYG withholding, superannuation and Single Touch Payroll reports
  • Asset records: purchase dates, costs and disposals for depreciation
  • Motor vehicle logbooks and travel diaries where you claim those costs

What makes a valid tax invoice

To claim a GST credit over $82.50 (including GST) you generally need a valid tax invoice showing:

  • The words 'tax invoice' and the seller's identity and ABN
  • The date the invoice was issued
  • A description of what was sold, including quantity where relevant
  • The GST amount, or a statement that the total price includes GST
  • The buyer's identity or ABN for sales of $1,000 or more

A simple monthly routine

  1. 1. Photograph or forward every receipt the day you get it.
  2. 2. Reconcile the business bank account once a month, not once a quarter.
  3. 3. Check that GST codes match the type of sale or purchase.
  4. 4. Set money aside for GST, PAYG and super as it accrues.
  5. 5. Review the quarter before lodgement — errors are cheap to fix early.

If that routine keeps slipping, that is exactly what bookkeeping support is for — see appointment options and BAS agent services.

Common questions

How long do I need to keep business records?
Generally five years from when you prepared or obtained the record, or five years after the transaction is complete — whichever is later. Records for depreciating assets and capital gains may need to be kept longer, because the five years runs from the year you claim or sell.
Can I keep records digitally instead of on paper?
Yes. Scans and photos are accepted as long as they are a true and clear copy, in English, and you can produce them if the ATO asks. Back them up — a lost laptop is not an excuse the ATO accepts.
Do I need a receipt for every expense?
You need written evidence for the expenses you claim. There are limited concessions for small or hard-to-substantiate items, but the safe habit is a receipt for everything and a card statement as backup.
What happens if my records are incomplete?
The ATO can disallow deductions and GST credits you cannot substantiate, and penalties can apply for failing to keep records. If yours are behind, a bookkeeper can reconstruct much of it from bank feeds and supplier statements.
Which accounting software should I use?
Any of the mainstream cloud options will do the job for a small business, provided it is set up correctly and reconciled each month. Getting the chart of accounts and GST codes right at the start saves far more than the software costs.

Records behind? We can catch up.

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