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BOOK-KEEPING

Business people should get in the habit of collecting all financial documents and keeping some books of account themselves.

This is a summary of what business people should be keeping and what they also could process themselves for their business.

SEPARATE BANK ACCOUNT

It is a good idea to keep separate bank accounts for personal and business purposes. When opening a business bank account, use your registered business name, trust or organization name to give a clear indication that it is not a personal account. All business transactions should go through the business bank account, including all receipts and payments.

Many business people open a separate non cheque account to transfer some amounts to for the purpose of paying taxes.

Make sure that you keep all your business and private bank statements. File them in order of their dates. You will not be able to complete your end-of-year business accounts until you have them all. Most banks will charge you for replacement statements.

If you have EFTPOS transactions for the business arrange that you have a separate EFTPOS Card for the business and that they be charged to this business account.

Open up a separate non-cheque account for the business to put money into to pay for future taxes.

CHEQUE BOOKS

Most businesses pay expenses by cheque. Make sure that you fill in these details on each cheque butt:

	The date of payment
	Name of the person or business you are paying (the payer)
	The amount of the cheque
	Type of goods or services purchased

DEPOSIT BOOKS

Many businesses use deposit books to record their sales into their bank account. In your deposit book write down the:

	Date of the deposit
	Payer’s name
	Amount of each deposit.

INVOICES TO CUSTOMERS

Process Invoices to your customers to sales. A normal invoice will generally show:

	The seller’s name
	The purchase date
	The amount of the charge
	A description of the goods or services being sold

Keep all copies of the vouchers and voucher schedules from your credit card sales and make sure you include your credit card sales when working out your total sales for the GST period for GST returns.

CREDIT NOTES

Prepare a Credit Note if the price of the goods and services has decreased after the original invoice was issued. Show the words “Credit Note” in a prominent place, in addition to the details as to the credit.

INVOICES FOR PURCHASES

If you buy goods or services on credit for the business you will usually be sent an invoice requesting and recording payment. Make sure you keep your Invoices for purchases. Don’t send them back to the supplier with your remittance advice and payment.

If you receive regular supplies from a supplier, it is a good idea to tick off all the invoices you have received from the supplier and attach these to the statement. That way you can make sure that you are not paying one invoice twice

It is helpful to sort your expense invoices into those that you have paid and those you haven’t paid yet. Write the cheque number and date paid and cheque amount on the statement or invoices for paid items. File the paid items in cheque number sequential order.

EFTPOS CREDIT CARD PURCHASES

When you make purchases using a credit of EFTPOS card for your business, make sure you keep:

	Your card vouchers
	Payment receipts from the supplier. This is especially important for service stations and stores selling a multitude of products, as you must be in a position to confirm that the purchase was definitely business related.
	Monthly statements if credit card.

You might find it helpful to attach you vouchers and receipts to the monthly statements, so that they are all in the one place.

A number of businesses process their financial records to electronic cashbook systems but there are also a number who do not use these and process their records manually.

If you are keeping your records manually it is a good idea to prepare a Cash Book which summarises all payments and receipts during the year. It shows different types of sales and income, purchases and headings under the appropriate headings. The headings you use will depend on the type of business or organization you run. A well kept cashbook will :

	Give you information as to what you are receiving for various income types and what you are paying out for various purchase types during the period.
	Save you accounting fees (as opposed to just taking your cheque books and deposit slips along to your accountant and requesting him/her to analyse these)
	Give you the information as to GST collected during the period and GST paid during the period and therefore give you the information to quickly prepare your GST.

Some tips on setting up a cashbook:

	Buy an Analysis Book with as many columns as possible, preferably 16, as this allows you to create as many purchase category headings as possible.
	Make sure you write up all your business cheque payments, deposits and any other items that are shown on your bank statement. Your cashbook should reflect all items that go through you business bank statement.
	If you are registered for GST write up the cashbook each GST period then add the columns for this period, then start a new page.
	Choose expense and income titles in your cashbook that are relevant and common to your business.
	Establish a separate column for categories that occur frequently throughout the year. For those categories that don’t occur frequently, place these in a Miscellaneous column to the right of the page. Write description of these items beside the amount.
	If you are GST registered, set up separate columns for GST paid on purchases and GST received from sales and income. When you do this the total amount of the payment will go in the amount column, the GST collected or paid (total liable for GST divided by 9) will go in the GST column and the net after deducting GST amount will go in the specific category column.
	Some items don’t include GST, such as wages, bank charges, interest, loan repayments, drawings and capital contribution (personal funds introduced), GST payments and GST refunds on GST Assesments.
	Add up all columns at the end of the GST period. Check that the Amount column equates to the sum of all the other columns

Examples of cash book pages are as follows:

CASH PAYMENTS BOOK

Date	Paid To	Amount	GST	MV Exps	Bank Chgs	Miscellaneous
1/12/2000	J Bloggs	100.00	11.11	88.89
13/12/2000	F.Dee	67.50	7.50	60.00
20/12/2000	ICANZ	360.00	40.00			Subs 320.00
30/12/2000	Westpac	13.00			13.00
		540.50	58.61	148.89	13.00	320.00

CASH RECEIPTS BOOK

Date	Received From	Amount	GST	Sales	Capital Contribution	Miscellaneous
13/12/2000	F. Man	321.00	35.66	285.34
15/12/2000	H. Lee	78.75	8.75	70.00
20/12/2000	Personal	200.00			200.00
25/12/2000	Westpac	1000.00				Loan 1000.00
		1599.75	44.41	355.34	200.00	1000.00

On occasions the business person will make day-to-day purchases for items that are too small to pay for by cheque or if you don’t have access to EFTPOS and pay for these with cash in his pocket of from a petty cash fund. Some examples could be milk, coffee and tea, stationery, postage and taxi fares. It is important to record these in separate schedule (often a small hard cover notebook kept in the car is ideal) so that you can:

	Keep track of small expenses so that they don’t get forgotten about as tax deductions
	Keep the cheque account free of lots of small transactions

Receipts for the charges should be kept, and the schedule written up as follows:

Date	Purchased From	What For	Amount
1/12/2000	NZ Post	Stamps	10.00
12/12/2000	ABC Dairy	Milk & Sugar	5.00
15/12/2000	Whitcoulls	Stationery	6.50

Don’t forget to claim these items in your GST Returns if you are GST registered.

When you employ someone, you have to keep their wage records for seven years, and a good way to do this is to use a wagebook. Use a fresh page for each employee and record the following information:

	Put employee’s name, address IRD Number and the tax rate in the heading section of the page.
	Each payday you will have to complete these details for each employee- total gross earnings including taxable allowances, PAYE deduction, any child support deductions, any student loan deductions, any other deductions, non-taxable allowances, the net wage.

A well kept wages book while allow you to collect the information for your Wages/PAYE returns to Inland Revenue Department promptly and accurately.

Here are some tips to make bookkeeping easier and save you time and money:

	Make bookkeeping part of your regular routine. When you’ve established a routine you’ll find that you work through your books quicker.
	Try to update your records regularly, say once a week.
	Avoid interruptions when doing your bookkeeping
	It is a good idea to set aside a place at work or home just for bookkeeping just for bookkeeping with your records filing cabinets close at hand.
	Try to complete each bookkeeping task in one sitting while your concentration is on it.
	Keep your books in an organised manner. You’ll work quicker and more accurately if you can find the information you need easily.

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