If you are in business you are legally required to keep and be able to show your financial records.
- It is essential to keep accurate records, such as in a cashbook or an accounting software programme.
- You must keep records for a minimum of seven years. This includes invoices, receipts, wage books, petty cash books, banking records, vehicle logbooks, asset registers and depreciation schedules.
- Remember to regularly back up any electronic records.
- Keep receipts for all transactions – there is no minimum amount. Be aware that EFTPOS receipts are prone to fading. We recommend stapling small receipts to A4 sheets to reduce the risk of losing them.
- All records must be in English unless you have express permission from the IRD to use an alternative language.
- If you use cloud computing to store your records you must still be able to retrieve your records for the IRD, either in hard copies or electronic form.
- If you’re registered for GST your records must be clear enough to work out your GST liability.
- You also need to keep additional records depending on the type of organisation you have, i.e. a partnership agreement, certificate of incorporation, trust deed etc.
Good record keeping can help your business to run smoothly. It can allow you to track your business performance throughout the year by monitoring cash flow, budgets and profit. Good record keeping makes it quicker and easier to complete regular GST and tax returns. Accurate records also make it easier to apply for finance, and for others to assess your entity as an investment opportunity. It can help reduce your accounting costs for year-end financial statements, and in the worse-case scenario of a tax audit can help that process to be quicker, easier and cheaper.
Please contact us if you have questions regarding record keeping relating to your business.