While it’s generally accepted that keeping good records is an important part of running a business, putting this into practice isn’t always as straight forward as it sounds, and exactly what records do you need to keep anyway?

 

Let’s start by looking at the benefits you can gain from keeping good records:

• If your records are complete and organised logically, it makes it quick and easy to find what you’re looking for later
• Having a consistent, reliable filing system makes it easier when multiple people use or need access to the documents
• Inland Revenue requires taxpayers to keep all financial records for seven years
• The Companies Office requires companies to keep all financial records for ten years
• You will be well prepared for any audits and won’t need to stress as much

What records should you be keeping?  Here are the items many businesses and other taxpayers would be expected to keep, though some items will apply in some cases and not others.  The item most frequently missed by clients are details of any second hand purchases.     

• bank statements
• bank reconciliations
• supplier invoices and credit notes
• supplier statements
• donations receipts
• customer invoices and credit notes issued
• bank deposit details
• details of all cash receipts and bank deposits
• details of all cash payments
• details of all cash reconciliations
• cheque book stubs (each one complete with date, payee and amount)
• details of parties you have purchased second hand goods from in the normal course of business
  • in order to claim a second hands good credit where a tax invoice was not issued, you will need to retain the following details of the purchase:
    • name of the supplier
    • address of the supplier
    • date of purchase
    • description of the goods
    • quantity or volume
    • consideration given
    • any documentation
• Vehicle log book(s)
• RWT (interest) certificates
• NRWT certificates
• Dividend certificates
• Investment statements
• Rental statements from your rental property manager
• Hire purchase agreements
• Loan agreements
• Loan statements
• Lease agreements
• Insurance documents
• Stock take records
• GST returns
• FBT returns
• PAYE returns
• Income Tax Returns
• GST, FBT and income tax calculations (your accountant may retain these for you)
• IRD statements and notices (if your accountant is your tax agent, they may retain these for you)
• ACC statements
• Management accounts
• Depreciation schedules
• Tax accounts
• Shareholder resolutions (if your accountant acts as your registered office, they may retain these for you)
• Company minutes (if your accountant acts as your registered office, they may retain these for you)
• Company registers (if your accountant acts as your registered office, they may maintain these on your behalf)
• Details of dividends issued
• Trustee resolutions
• Trustee minutes
• Staff records
• Payroll calculations
• Grant / funding applications and agreements

That is potentially a lot of documentation to keep track of.  In my next post, I will look at some of the options available for storing and managing your records, including several electronic methods.  Electronic filing is very topical with several popular accounting solutions now allowing you to store (or store a link to) supplier invoices and other documents with the transaction.

 

The above information is current at the time of writing and is provided in general terms relevant to New Zealand only.  We do not accept responsibility or liability for its accuracy or for the outcomes that may result from placing reliance on this information.  

 

Amanda Imms CA

Principal

AJ Accounting Limited

ph. 021 771 557

amanda@ajaccounting.co.nz