Record keeping requirements Australia: What every employer needs to know

As a business owner, you’re juggling a dozen things at once. From chasing your own dream to creating jobs, you’re making an impact in so many different ways. But amidst the day-to-day, there’s the less glamorous side of running a business… record keeping. 

While it might seem like a chore, getting it right is essential to your success.

Beyond a folder of receipts for the Australian Tax Office (ATO), solid record keeping gives you a view of your business’ financial health, helps you meet your compliance obligations and supports better decision-making. 

To help you understand your obligations when it comes to record-keeping, we’ve put together a straightforward breakdown of everything you need to know. 

What is business record keeping?

Business record keeping is the practice of creating, storing and maintaining all documents and information related to your business operations. It covers a wide range of information, including both financial and employee-related records.

At a high level, think of it as your business’s official history. Financial records, like invoices and bank statements, track the money coming in and going out. Employee records, such as contracts and payslips, document your relationship with your team. 

Why keeping business records is important

Maintaining good records is one of the smartest things you can do for your business. Here’s why it matters:

• Compliance: Meeting your legal obligations under Australian law, including tax, superannuation and fair work regulations is a non-negotiable. Proper record keeping is your first line of defence. 
• Financial transparency: Clear financial records give you an accurate view of your cash flow and financial position. This is crucial for managing day-to-day operations and planning for the future.
• Strategic decision-making: How can you make informed decisions without accurate data? Your records provide the insights you need to steer your business in the right direction.
• Dispute resolution: Should a disagreement arise with an employee, customer or supplier, well-maintained records can provide the evidence needed to resolve it quickly and fairly.
• Audits and inspections: If the ATO or Fair Work Ombudsman comes knocking, having organised records makes the process smooth and stress-free.

What types of business records should you keep?

Knowing which records to keep can feel overwhelming. To simplify, let’s group them into key categories. Each one plays a vital role in painting a complete picture of your business.

Financial records

These documents are the foundation of your financial management. They track every dollar, helping you manage cash flow and meet your tax obligations.

• Invoices and receipts for sales and purchases
• Bank and credit card statements
• Expense records
• Payroll summaries and wage books
• Loan agreements and financial statements
• Records relating to Goods and Services Tax (GST)

Employee records

Your people are your greatest asset and keeping accurate employee records is a key part of your employer obligations. These documents are vital for payroll, compliance and managing your team effectively. With the right HR software, you can streamline the management of these digital records.

• Employment contracts and agreements
• Timesheets and attendance records
• Leave records  
• Superannuation contribution details
• Tax file number declarations
• Records of pay rates, hours worked and termination details

Need some extra support when managing employee records? Our HR Advisory service can help set you up for success. 

Legal records

These documents prove your business’s legal standing and structure. They are foundational documents that you’ll need at various stages of your business journey.

• Business registration documents (e.g. ABN, ACN)
• ASIC filings
• Intellectual property documents (trademarks, patents, etc)
• Leases and property documents

Policies and procedures

Clear policies ensure everyone in your business is on the same page. They define expectations and create a fair and safe workplace.

• Workplace health and safety (WHS) procedures
• Employee handbooks
• HR policies (e.g. code of conduct, anti-discrimination)

Other useful documents to keep

Beyond the essentials, other documents can provide valuable operational insights and protect your business.

• Customer and supplier agreements
• Insurance policies
• Marketing campaign results
• Meeting minutes

Record keeping requirements for businesses in Australia

In Australia, several government bodies set the rules for record keeping. The ATO has its own set of record keeping requirements, while the Fair Work Ombudsman outlines specific obligations for employee records. Getting to grips with both is important.

Records must be kept for at least 5 years for the ATO and employment records for seven years

The general rule from the ATO is that you must keep records for five years. For business records, the five years start from when the record was prepared, obtained or the transaction was completed, whichever is later. 

For employee records, the Fair Work Act requires records to be kept for seven years. Failing to retain records for the required period can lead to penalties.

Records mustn’t be changed and must be stored in a manner that restricts changes

Your records must be a true and accurate reflection of your transactions. The ATO requires that you store your business records in a way that prevents them from being altered or manipulated. 

If you’re using digital records, your system must have controls to prevent unauthorised access and changes.

Records must be in English and easy to read

All records need to be kept in English. If you receive documents in another language, you’ll need to have them translated. 

Records must be easily accessible

You must be able to access records and produce them for the ATO or Fair Work Ombudsman if requested. Whether you use paper records stored in a secure place or digital records on your HR system, they need to be readily available. This is where a good record-keeping system proves its worth, saving you from frantic searches during an audit.

How do you store business records?

You can keep your records in paper or digital form. What matters is that they meet ATO requirements. However, most businesses lean toward digital storage because it’s easier, safer and far more efficient. Just make sure your digital files are clear, accurate copies of the originals and stored in a secure, backed-up system.

If you prefer paper, that’s fine too. Just keep your records organised and stored somewhere safe so they’re protected from damage or going missing. Whether you use  paper or digital, tidy, accessible records that give you confidence when you need them.

Introduce a good record-keeping system

Investing in a robust record-keeping system is one of the best moves you can make. Powerful employment software takes the pain out of compliance, while giving you the confidence to manage everything. 

Accounting platforms handle your financial records, while dedicated HR software automates the management of employee information. These systems are designed to help you meet your record keeping obligations efficiently, making sure that everything is organised and accessible. 

Keen to review your HR processes? Our HR Audit Checklist is a great place to start.

What are the benefits of record keeping?

Viewing record keeping as more than just a compliance task can unlock significant benefits for your business. It’s an opportunity to create efficiencies both operationally and financially. 

Staying on top of your business cash flow

With accurate and up-to-date financial records, you always know where your business stands. You can monitor your financial position, track expenses and make proactive decisions to manage your money effectively.

Meet tax and super obligations to stay compliant with the ATO

Staying on top of your records makes tax time far less stressful. With everything organised, you can lodge accurately and on time, meet your ATO requirements and steer clear of avoidable penalties. Good record keeping also helps you stay across your Goods and Services Tax (GST) responsibilities and make sure that super contributions for your team are paid correctly and on schedule.

Have records on hand when needed

Whether you’re applying for a loan, dealing with a dispute or facing an audit, having your records in order means you can produce the necessary documents without delay.

Privacy and compliance

When you collect and store records, especially employee records, you also take on the responsibility of protecting that information. The Privacy Act 1988 governs how businesses handle personal information and it’s crucial that your record-keeping practices are compliant.

This means protecting records from misuse, loss and unauthorised access. For example, employee data like bank details and Tax File Numbers are highly sensitive. Implementing a privacy policy and training your staff on their responsibilities is a critical step.

Should I keep digital and paper copies of all business records?

In most cases, a digital copy is sufficient, provided it is a true and clear reproduction of the original and stored securely. Many businesses are moving to entirely paperless systems to save space and improve efficiency. However, for certain critical legal documents, some businesses prefer to keep the original paper records as a backup.

What penalties are imposed for inadequate record keeping?

Failing to meet your record keeping requirements can result in significant penalties. The ATO can impose fines for not keeping proper records and during an audit, a lack of documentation can lead to unfavourable assessments. 

Similarly, the Fair Work Ombudsman can issue penalties for breaches of employee record keeping rules, which can be costly in a dispute.

How long should I keep client records for?

The rules for client or customer records can vary depending on your industry and the nature of your service. As a general guide, keeping them for at least seven years is a good practice, especially if they relate to contracts, financial transactions or potential legal matters.

Who regulates business record keeping in Australia?

Several key bodies oversee record keeping:

• The Australian Taxation Office (ATO): Sets the rules for financial records and tax-related documents.
• The Australian Securities and Investments Commission (ASIC): Governs record keeping for companies, especially concerning corporate governance and financial reporting.
• The Fair Work Ombudsman (FWO): Defines the requirements for employee records, including pay, hours, leave and termination.

What software tools can help with record keeping?

The right tech stack can transform your record keeping from a headache into a streamlined process.

Accounting platforms (e.g. Xero, MYOB): These tools are essential for managing financial records, invoicing and preparing for tax time.

Payroll software (e.g. Employment Hero Payroll): Automates pay runs, superannuation and tax calculations, making sure your employee payment records are always stored securely.

HR Systems: An all-in-one platform like Employment Hero integrates HR, payroll and recruitment into a single source of truth. It helps you manage everything from onboarding to termination while supporting compliance with employee record keeping requirements. For expert guidance, our HR Advisory service can also help you navigate complex issues.

Common record keeping mistakes businesses make

Even with the best intentions, mistakes can still slip through the cracks. One of the most common issues is keeping incomplete records. Missing invoices or untracked cash payments can cause big problems down the line.

Another trap is poor organisation. A shoebox full of receipts might feel like a system, but it’s far from it. Disorganised records make it harder to find what you need and increase the risk of losing important information.

Not backing up your data is another major risk. If your digital records are stored on a single device without a backup, a hardware failure could wipe out everything. This is where reliable HR and accounting software really pays off.

Finally, you want to avoid mixing business and personal expenses. It might seem harmless in the beginning, but it complicates your bookkeeping and can raise red flags with the ATO. Keeping clean, separate records will save you time and stress.

Record keeping tips for small businesses and startups

• If you don’t have a dedicated finance or HR team, these tips can help you stay on top of your records.
• Start now: Don’t wait until tax time. Implement a system from day one.
• Go digital: Use apps and software to capture receipts and manage records on the go.
• Schedule a weekly review: Set aside a small amount of time each week to organise your records.
• Separate your finances: Open a dedicated business bank account to keep transactions clear.
• Lean on help when needed: Don’t be afraid to consult a bookkeeper, accountant or HR expert.

Transform your record-keeping with Employment Hero

Still holding onto paper records? Now’s the perfect time to go digital with Employment Hero. Store all your HR and payroll data securely in the cloud and say goodbye to filing cabinets for good. Keep every contract, timesheet and certification organised and easy to find. Automated workflows and audit trails take care of the hard stuff, while employee self-service keeps information clean and current.

Want to learn more? Get in touch with one of our business specialists now. 

Disclaimer: The information in this article is current as at 27 November 2025, and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related bodies corporate (Employment Hero). The views expressed in this article are general information only, are provided in good faith to assist employers and their employees, and should not be relied on as professional advice. The Information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising either directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your own research and to seek professional advice before making any decisions or relying on the information in this article.