What's different about bookkeeping for a company versus a sole trader?

A company is a separate legal entity, so its money isn't your money, even though you own it. That distinction drives everything: director drawings need to be recorded properly as salary, dividends, or a complying loan, not just treated as available cash. Sole trader bookkeeping doesn't have that separation to manage.

What records does a small company need to keep?

Bank and transaction records, invoices issued and received, payroll records if you have employees, records of any money drawn by directors, and enough documentation to support your BAS and annual company tax return. Records generally need to be kept for five years.

What is Division 7A and why does it matter for a small company?

Division 7A is an ATO rule that treats certain payments, loans or forgiven debts from a private company to its shareholders as unfranked dividends, fully taxable, unless properly structured. It's one of the most common ways small company directors accidentally create a large, unexpected tax bill by taking money out informally.

Do I need a bookkeeper if I have an accountant for my company?

Usually, yes. An accountant typically prepares your annual company tax return from records that already exist, they generally don't do the ongoing weekly or monthly reconciliation, payroll and BAS lodgement that a bookkeeper handles. Without that ongoing work, your accountant is working from incomplete or late information at year end.

Small Company Bookkeeping: A Practical Guide

Published August 2026By True Tally Bookkeeping7 min read

Why a Company Changes the Bookkeeping

A Pty Ltd is a separate legal entity from you personally. That sounds abstract until you consider what it means practically, money in the company's bank account is the company's money, not yours, even though you own and run the business. Every dollar you take out needs to be classified correctly, as salary, as a declared dividend, or as a properly documented loan. Treating it as "just available cash" is where small company bookkeeping most often goes wrong.

What Records the ATO Expects

The baseline is similar to any business, bank and transaction records, invoices issued and received, payroll records if you employ staff. What's different for a company is the extra layer around director transactions, any money drawn, loaned, or repaid between you and the company needs to be documented clearly enough that it's obvious what each transaction actually was.

Record type	Why it matters for a company
Bank reconciliation	Confirms the company's actual cash position, separate from yours
Director drawings log	Determines whether Division 7A applies to money taken out
Payroll records	Supports director salary if that's how you're paid

Division 7A, the Trap Most Directors Don't See Coming

Division 7A of the Income Tax Assessment Act treats certain payments, loans or forgiven debts from a private company to its shareholders as unfranked dividends, fully taxable, unless specific conditions are met. In practice, this catches directors who take money out of the company informally, no declared salary, no dividend resolution, no complying loan agreement, and end up with an unexpected, sizeable tax bill because the ATO treats the withdrawal as a deemed dividend.

        The fix is simple but unforgiving. Every withdrawal needs to be one of: a properly declared salary, a formally resolved dividend, or a complying Division 7A loan with minimum repayments and a benchmark interest rate. Getting this coordinated between your bookkeeper and accountant matters, it's expensive to fix after the fact.
      

Bookkeeping Versus the Annual Tax Return

An accountant typically prepares your company's annual tax return, but they're working from records that already exist. If those records are incomplete, late, or arrive as a shoebox in July, your accountant is reconstructing a year's worth of transactions under time pressure, which costs more and increases the chance of something being missed. Ongoing bookkeeping, monthly reconciliation, current payroll, correctly classified director transactions, is what actually makes the annual return straightforward.

Looking for a bookkeeper in Geelong? True Tally provides fixed-fee bookkeeping, BAS lodgement and payroll for small businesses across Geelong and the Surf Coast.

True Tally: company bookkeeping done properly, year-round

We keep small Geelong companies' books current, director transactions classified correctly, and your accountant working from clean records at tax time. Book a free call.

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