The Importance of Source Documents

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Oscar Wilde writes: ‘The truth is rarely pure and never simple.’  If you follow good source document practices, his words need not apply to your bookkeeping. 

Why should you keep source documents? 

Source documents – receipts, invoices, credit notes, bank statements, remittance advice, loan documents, insurance payment schedules and so on – are a central component of accurate bookkeeping. 

Without correct information from a clear source, your bookkeeper and accountant may be limited in their ability to provide you with accurate information on your business’ financial position.  If your business is registered for GST, you may also lose out on claimable GST credit if you do not document your business expenses sufficiently. 


Regulatory requirements 

Keeping good source documentation is a regulatory requirement: the Australian Taxation Office (ATO) and Australian Securities and Investments Commission (ASIC) have regulations on what kind of documents you need to keep and how long you need to keep them for. 

The required length of time to keep documents can differ depending on what the documentation is for.  However, generally speaking: the ATO requires most records to be kept for 5 years, and ASIC requires financial records to be kept for 7 years after the transaction recorded in the record is complete. [1] [2] 

It is important to be aware of what documents you need to store, as well as how long you need to store them for.  If you do not keep required documentation for the appropriate length of time, your business may be subject to penalties.  QiBalance Bookkeeping can help you avoid penalties by keeping on top of documentation requirements. 


Source documents for accounting and bookkeeping 

Source documents are important for your business, and they are also important for accountants and bookkeepers, who rely on source documents to identify, record and validate business activities.  Without the correct source documents, your accountant and bookkeeper can take longer to process your business data and may be unable to complete important tasks. 

On the other hand, getting the correct documents to your accountant and bookkeeper in a timely manner and a useable format benefits all parties.  It avoids tedious back-and-forth, making it both more time-efficient and more cost-effective. 

 

Digital documentation 

Although source documents can be stored in hard copy form, there are benefits to using a digital storage system.  Digital storage allows documents to be sorted, processed and shared with greater ease.  It also allows business owners, bookkeepers, and accountants to take advantage of AI technology to identify source document data. 


Hubdoc 

QiBalance Bookkeeping uses an electronic document storage system called Hubdoc.  Hubdoc is Xero-integrated, meaning that that information identified in Hubdoc can be easily transferred to Xero.  Both Xero and Hubdoc are cloud-based, which means the information stored in Hubdoc and Xero can be accessed and referred to by businesses, bookkeepers and accountants regardless of physical location, as long as they have access permissions and an internet connection. 

Two ways to upload documents to Hubdoc are: 

  1. Taking a picture directly by using the Hubdoc app on a mobile device; and 

  2. Sending a file by email, either by forwarding your email or creating a new email. 

Photographing physical receipts into Hubdoc 

The video below shows how to use the Hubdoc app to upload a receipt directly to Hubdoc: 

[3] 

  1. Download the Hubdoc app and log in. 

  2. Find a location with good lighting. 

    If the lighting in your picture is poor, your bookkeeper may have difficulty identifying the information in your invoice or receipt.  If your bookkeeper is unable to identify the information in your document, they may contact you and request that you upload a clearer picture. 

  3. Click the ‘+’ at the bottom of your Hubdoc screen. 

  4. Ensure that the following elements are in the image: 

    A) What did you buy? 

    • The description/s of the goods or services being purchased and the cost for each line item. 

    • Goods and Services Tax (GST). 

    • Totals

    B) Who did you buy it from? 

    • The name of the vendor supplying the goods or services. 

    • Their Australian Business Number (ABN). 

    C) How did you pay for it? 

    • The date of the transaction. 

    • If paid for via debit or credit card: the last 4 digits of your card number. 

    • If paid for in cash: value of cash paid and change given. These elements will allow your transactions to be properly processed in Xero. 

    • We do not need advertising or promotional information. 

    • However, be aware that sometimes the date and GST amount are at the bottom of the receipt.  This is required information, so please upload the full receipt if there is required information at the bottom. 

  5. Take a photo, making sure that you capture all the data and that it is clear to read.

    If the image is not clear to read, you can retake the photo. 

  6. When you are happy with your photo, click ‘Upload file’. 

    Your receipt will be uploaded to Hubdoc for your bookkeeper to process. 

 

References 

  1. Australian Securities & Investments Commission [ASIC]. (2012). What books and records should my company keep? https://asic.gov.au/for-business/running-a-company/company-officeholder-duties/what-books-and-records-should-my-company-keep/ 

  1. Australian Taxation Office. (2024). Overview of record-keeping rules for business. https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/record-keeping-for-business/overview-of-record-keeping-rules-for-business 

  1. Restaurant Bookkeepers & Numbers Aus. (2019). Hubdoc Phone App | Easy How-To | Restaurant Bookkeepers. https://www.youtube.com/watch?v=F6lLRZUzInI 

  1. Xero Limited. (2023). Upload or email documents into Hubdoc. https://central.xero.com/s/article/Upload-or-email-documents-into-Hubdoc