Try a small test. Pick a business payment from six months ago and ask someone else to explain it using the records alone. Can they find the invoice, see what was purchased, confirm who approved it and understand how it was treated?
If the answer depends on calling the person who was there, the record is not yet doing its job. A workable digital filing process should preserve the explanation as well as the transaction. That becomes particularly valuable when a staff member leaves, you change accountants or the business moves to new software.
Keep evidence behind the bank feed
A bank feed makes transactions easier to capture. It does not contain every detail needed to explain them. Attach the relevant invoice or receipt and record the business purpose where it is not obvious. Keep contracts, approvals and correspondence when they explain the terms.
For a purchase with mixed business and personal use, preserve the basis for the allocation. For a refund, link it to the original transaction. For money introduced by an owner, record whether it is a contribution, a loan or something else, with the supporting agreement where needed.
Use descriptions that another person can understand. “September workshop venue deposit” is more useful than “payment”. A consistent supplier name and invoice reference also make duplicates easier to spot without creating a complicated naming convention.
There is more than one retention clock
The ATO generally requires most business records to be kept for five years. The starting point can depend on when the record was prepared or obtained and when the related transaction or act was completed. It is not a blanket rule to delete everything five years after an invoice date. See the ATO’s overview of record-keeping rules.
Other requirements can run longer. ASIC requires companies to keep financial records for at least seven years. Fair Work requires time and wages records for seven years. Employee confidentiality and access restrictions still apply while those records are retained.
Asset cost information, carried-forward losses and other long-running matters may need evidence beyond the general period. The ATO identifies specific records to keep for longer than five years. Pending reviews, disputes and other legal obligations can also affect when destruction is appropriate.
Create a short retention schedule by record type. Include the applicable period, the event that starts it, where the record is stored and who can authorise disposal. Keep foundational documents such as deeds and ownership records available for as long as they remain relevant. Ask for advice before applying a single automatic deletion rule across the whole business.
Make digital storage retrievable
Choose a business-controlled location for the master records. The critical folder should not exist only in an employee’s personal email account or on a bookkeeper’s laptop. Give people the access needed for their role and remove that access when their role ends.
Capture readable documents. Check that a scanned receipt includes the supplier, date, amounts and other relevant information, rather than just the total at the bottom. Preserve the original electronic document where available and keep changes traceable.
Use a simple structure organised around financial years and material record types. Keep an index for records that live in another system, such as payroll or a contract platform. An index prevents the fiction that everything is in one place when the actual evidence is scattered across five subscriptions.
The ATO’s guidance on keeping business records secure is a useful starting point. In practice, access controls, backups and a tested recovery process should fit the sensitivity of the information.
Before changing systems, test the exit
Do not cancel the old subscription merely because opening balances have appeared in the new ledger. Confirm which records moved: invoices, attachments, payroll history, audit trails and reports may behave differently.
Export the required records in usable formats, then test a sample. Can you still open an attachment, explain a transaction and reproduce the year-end balances without the old login? Reconcile the closing position in the old system to the opening position in the new one and retain that reconciliation.
Agree who owns the export and where it will be kept. This should form part of the handover with an outgoing provider, alongside outstanding queries, lodgments and access arrangements.
A short monthly review is easier than a rescue
Review missing documents, unusual transactions and unreconciled balances each month. Allocate the open items and close them while the details are still familiar. The task can be brief if the capture process works.
Target Advisory can help organise the accounting records and the handover requirements. Bring the current software list and a sample month of transactions. We can then identify where evidence is missing and design a routine the business can maintain.
Target Advisory 