“The most important reason for keeping good records is that it is a legal requirement. By law, you must keep business records:
“We use benchmarks to identify businesses that may be avoiding their tax obligations by not reporting some or all of their income. By developing benchmarks for small businesses we are making it clear what we expect from businesses in an industry. In doing so we are making it fairer for everyone by making it harder for dishonest taxpayers to get away with not reporting cash transactions.”
(Direct quote from www.ato.gov.au)
The ATO are now using benchmarks they have developed to select businesses for audit. If you are outside their benchmarks you can expect an audit. The best protection is to ensure that you have excellent records to support your financial statements and tax returns.
We have developed alliances with a number of bookkeepers who can work directly with you to ensure that your record keeping is in accordance with the tax office requirements. In most cases, businesses who engage a bookkeeper find they have a greater control of their financial affairs, reduced tax agent compliance costs and more time to spend on their business.