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What is bookkeeping?

  • By Book Keeping Pros
  • Sources checked 15 Oct 2026

Definition

Bookkeeping is the process of recording a business's financial transactions, such as sales, purchases, payments and receipts, and keeping those records organised and up to date. Good bookkeeping gives the business accurate figures for its reports, its decisions and the records it is required to keep.

Day to day, bookkeeping means entering transactions, matching them to bank statements, keeping track of unpaid bills and invoices, and filing the documents behind each entry.

The result is a set of books from which the business, or your accountant, can produce reports such as the profit and loss statement and the balance sheet.

In Australia

The ATO says businesses are legally required to keep records of their transactions, and that most records must be kept for 5 years. Records must be in English or easy to convert to English, and stored in a way that protects them from being changed or damaged.

Companies have a further rule. Section 286 of the Corporations Act 2001 requires a company to keep written financial records that correctly record and explain its transactions, and to keep them for 7 years after the transactions are completed.

Common mistakes

  • Letting entries pile up until the end of the financial year, when the documents behind them are harder to find.
  • Mixing personal and business spending in one account without marking which is which.

Related terms

Sources

  1. Overview of record-keeping rules for business

    Australian Taxation Office. Current at 18 June 2026 (QC60718), released 18 June 2026. Checked 15 October 2026.

    © Australian Taxation Office for the Commonwealth of Australia Licence: ATO website copyright notice (copy, adapt and distribute, without implying ATO endorsement).

  2. Corporations Act 2001, sections 9 and 286

    Federal Register of Legislation, Office of Parliamentary Counsel. Compilation No. 149, 19 September 2026, released 19 September 2026. Checked 15 October 2026.

    Based on content from the Federal Register of Legislation at 15 October 2026. For the latest information on Australian Government legislation please go to https://www.legislation.gov.au. Licence: CC BY 4.0.