KEEPING OF RECORDS
Good
accurate financial records are needed for two extremely important reasons:
| To
substantiate what is in the accounts. This will be necessary to convince the Inland Revenue
Department if they decide to audit your accounts, and also may be required
in the case of sale of the business. |
| To
help you know what is going on in your business. |
Basically you must keep enough records to be able to calculate your income and expenses and to confirm your accounts. Your records must be in English unless you get get approval from IRD to use another language for your records. If you’re registered for GST your records must be clear enough to work out your GST liability.
For
business records, you must keep:
| Books
of account, such as your cashbook, journals and ledgers |
| Receipts
and Invoices |
| Bank
statements, cheque butts and deposit slips |
| Worksheets
showing tax return calculations |
| Final
Profit and Loss statements and Balance Sheets |
| Any
necessary documents to confirm account entries. |
For
business expenses, records such as the following should be kept:
| Your
Cashbook and Petty Cash Book |
| Depreciation
Calculations |
| Details
of travel expenses |
| Entertainment
expenses |
| Motor
Vehicle Logbooks |
| Telephone
and power bills and other such records |
| Wage
records for employers |
| Legal
statements, such as purchase or sale agreements of a business and leases |
| Interest
and dividend statements |
You must also keep records for all your business assets and liabilities at the end of the year, including:
| Lists
of debtors and creditors |
| Stock
take figures |
| A
fixed aset register |
Further
records that different types of organizations should keep are:
| Partnerships-
partnership agreement (if you have one) |
| Companies-
Certificate of Incorporation, Minute Books |
| Trusts-
the Trust Deed |
| Incorporated
Organisations- Certificate of Incorporation |
All
business records should be kept for at least seven years from the end of the tax
year or the taxable period to which they relate.
It’s
a good idea to keep all personal records and transactions separate from business
records. This is best
achieved by using separate cheque and savings accounts for the business.
As with business records, you must keep all private records (including
private bank account records) for seven years.
If we can assist further, please email TotalAccounting as follows:
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