Did you know you can legally store all your business records electronically in Australia? Under the Electronic Transactions Act 1999, businesses are permitted to keep records in digital form. While some documents may still be kept in hard copy, most business records can—and should—be stored digitally to streamline operations and improve efficiency.
What Counts as a Business Record?
A business record is any document that explains, validates, or tracks your business activities, especially for tax and superannuation purposes. Your records must include enough detail for your bookkeeper, tax agent, or the ATO to determine the purpose and relevance of each transaction.
At a minimum, business records should include:
- Date and amount of the transaction
- GST component, if applicable
- Purpose of the transaction (e.g. tax invoice, receipt, payslip, etc.)
Requirements for Tax Invoices:
- Requirements for Tax Invoices – refer to the updates listed above for invoices less than $1,000
- For invoices over $1,000, they must also include:
- The buyer’s identity or ABN
Why Switch to Digital Record Keeping?
Benefits of Going Digital:
- Easy Access & Organisation: Digital records are searchable and can be organised with consistent folder structures. For example, set up folders by financial year, then alphabetically by supplier.
- Improved Security & Data Integrity: With user permissions, audit trails, and encrypted storage, it’s easier to prevent unauthorised access or tampering. Unlike paper, you can track who edited what and when.
- Better Collaboration: Sharing files through secure platforms or cloud storage allows for fast, remote access—saving time for you and your bookkeeper.
- Space & Cost Savings: No more overstuffed filing cabinets—free up your office and reduce printing costs.
Common Pitfall to Avoid:
Some businesses store all receipts and invoices in their email inbox without any organisation. This makes it difficult to retrieve documents when needed and wastes valuable time. A simple folder structure can make a big difference.
Digital Record Keeping Requirements in Australia
Whether digital or hard copy, business records must:
- Be kept for at least 5 years from when you lodge the relevant tax return
- Be easily accessible for your bookkeeper, tax agent, or the ATO
- Be legible and in English, or easily translated
- Not be altered once created
- Be protected against loss or unauthorised access
If you scan or photograph paper records, make sure the image is clear and readable. Backups are essential—cloud-based systems with encryption and regular backups are ideal. If you use password-protected files or encrypted formats, make sure the ATO can access them if requested.
Best Practice Tip: Attach Supporting Documents
Link your receipts, invoices, and contracts directly to transactions in your accounting software (e.g. Xero, MYOB, QuickBooks). This saves time for everyone involved and ensures records are complete and easy to verify.
Understanding Digital Signatures
The same laws that allow for electronic storage also support electronic signatures—but not all e-signatures are created equal.
- Electronic Signatures: Can be typed names or scanned images. These are easy to use but may not be secure or legally binding in every situation.
- Authenticated Digital Signatures: These use encryption to verify the identity of the signer. They are highly secure, difficult to forge, and often legally preferred.
Benefits of Digital Signing Tools:
- Faster turnaround for documents—no printing or scanning
- Automatic alerts when documents are signed
- Reliable audit trails for compliance
- Excellent security features
Use cases include:
- Employment agreements
- Client engagement letters
- Contracts
- Government forms and authorisations
Ready to Go Digital?
If you’re still juggling paper and email attachments, now is the time to transition to a full digital system. Not only will this save time and reduce errors, it also supports scalability, security, and sustainability.
Need help setting up digital record keeping for your business? Contact us today—we’re here to help you make the transition simple and stress-free.
