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 youíre 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.

   

Itís 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.

   

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