Ministry of Revenue & Customs

As soon as you decide to go into business, it is important for you to start keeping your records.This is because it E28099s much harder to work backwards at a later date. Although there are legal  reasons for keeping accurate records, there are also good business reasons to do so.

Keeping accurate, complete records

Your business records should cover:

• banking - cheque books, deposit books, bank statements

• your income - invoices, credit card sales, debit and credit notes

• your expenses - invoices for purchases, credit card purchases

• cashbooks, petty cashbooks and wage books, books of account that record receipts and payments, such as your cashbook, journals and ledgers

• bank statements

• wage book, if you're an employer

• invoices, including tax invoices

• receipts

• cheque and deposit books

• details of entertainment expenses for clients, staff or suppliers

• till tapes and day books

• stock take figures

• list of debtors and creditors

• interest and dividend statements

• list of assets and liabilities

• depreciation schedules

• final profit and loss statements and balance sheets

• any other documents that confirm entries in your accounts, such as worksheets.

Reasons for keeping your records accurate and up-to-date

• Accurate records will help you to have better control of your business. They help determine whether your business is making enough money to meet its expenses.

• You'll also have a better idea of how well your business is doing during the year, rather than finding out when your finally get your books done at the end.

• Good record keeping increases your chances of getting finance or funding and makes it easier for others to know whether to invest in your business.

• When it's time to fill in your income tax return and CT returns, all the information you need will be readily available. You'll find the more up-to-date your records are, the quicker you'll get through your tax returns and paperwork.

• An Inland Revenue audit will be quicker and less disruptive if all the information is easy to find. If you are in business you can expect to be audited at some stage.

Records must be kept for no less than five years from the end of the tax year or the taxable period to which they relate.

Records of income

You should keep the following records of your income:

• Tax invoices, if you are registered for CT and invoicing a customer/client or another CT-registered person

• Other invoices, eg, for supplies of $50 or less, which do not require a full tax invoice even if you are registered for CT  

• Credit card sales, keeping all copies of the vouchers and voucher schedules

• Debit notes, which you must send to your customers (clearly marked as a "debit note") if the price of your goods/services increases after you issue your original invoice

• Credit notes, which you must send to your customers (clearly marked as a "credit note") if the price of your goods/services decreases after you issue your original invoice

• Cash register tape for businesses that make many cash sales and therefore are not required to issue tax invoices for each sale. All cash sales should be recorded on the tape.

You must keep these records for five years after the end of the tax period to which they relate.

Electronic records

If you are storing records on a computer, you must continue to keep all  relevant paper records. Also take care to keep adequate back-up copies of your important electronic records (additional disk copies or print-outs). Electronic records must also be kept for seven years.

Tax invoices

For a tax invoice to be valid, it must have:

• the words "tax invoice" in a prominent place

• the name and registration number of the supplier

• the name and address of the recipient

• the date the tax invoice is being issued

• a description of the good and services supplied

• the quantity or volume of the goods and services supplied and either:

• the total amount of tax charged, the consideration excluding tax and the consideration inclusive of tax, or

• the consideration for the supply and a statement that includes the tax charge.

Deposit books

Many businesses use deposit books and record their sales. Banks can provide large deposit books with carbonized copies of each page so you can keep a copy of the items you are depositing.

In your deposit book write down:

• the date of deposit

• the payer's name (the person you got the funds from)

• the amount of each deposit. 

The deposit book will usually have columns for recording information about whether the deposit is from a cheque, credit card docket or cash

Cashbook

Cashbook—records all money that your business pays (payments) and receives (receipts) by cash,cheque, automatic payment and automatic teller machine. List different types of income and expenses under separate headings and keep a running balance. Use separate columns for CT paid and received. Also,it’s a good idea to check your cashbook entries against your bank statement, and total all columns at least monthly. Cashbooks are important records for all businesses to keep track of their income and expenses. If you are keeping these records electronically, take care to keep adequate back-up copies of the important records (additional disk copies or print-outs).

Petty cash book— records how the small amount of cash kept on hand to make day-today purchases for items that are too small to pay by cheque or if you don’t have access to EFTPOS is spent. For example milk, tea, postage and taxi fares. Attach the receipts for petty cash expenses to a blank page in the book.

When setting up a petty cash book you'll need:

• a petty cash tin or purse to keep the money in

• a petty cash book to record expenses.

At the end of each month, econcile the cashbook with your bank statement by balancing the payments and receipts in your cashbook with your bank balance.

Banking records and drawings

For clear banking records it helps to have a separate bank account just for your business dealings. All business transactions should go through this account. You might also consider opening a savings account for your future tax payments.

Keep all the following banking records

• Cheque books - record the full details on the cheque butt as you write out each cheque.

• Deposit books - record the full details. Many businesses use large deposit books, which are available from your bank.

• Bank statements from both your business and private accounts. Arranging with your bank to issue your statement on the last day of each month may help you in preparing your GST returns and in reconciling your bank statements with your cashbook.

Withdrawing money for personal use (drawings) and introducing personal funds

Clearly identify any money you withdraw from your business account for personal use. Label it as "personal drawings".

Clearly identify any money you introduce to the business from your own personal funds. Label it as "personal funds introduced".

Records of expenses

The records of your expenses should include:

• invoices for purchases of more than $500, which you must receive when you buy goods or services on credit for the business

• evidence of payment (e.g., invoice, cash sale docket, till receipt) for purchases of $500 or less, if you wish to claim the expense for tax purposes

• evidence of credit card purchases, including credit card vouchers, payment receipts and monthly statements. Also keep the invoice issued at the time of purchase.

Note: an EFTPOS transaction record is insufficient on its own as a record of a transaction

Keeping a wage book

Here are some tips to help you keep a wage book:

• Start a new page in your wage book as soon as an employee starts work with you,or at the beginning of each tax year. Make sure they give you the personal details you need.

• Keep a separate page for each employee, even if they were only employed for one day.

• Complete all these wage details each payday:

• total gross earnings, including taxable allowances (the amount before PAYE is deducted)

• the amount of PAYE deductions

• the value of tax-free reimbursing allowances.

Summarise the details for each employee at the end of each deduction payment period.This will be either twice in a month or monthly, depending on whether you are a large or a small employerSummarise the details for each employee at the end of each deduction payment period. This will be either twice in a month or monthly, depending on whether you are a large or a small employer

Keep a summary sheet that shows, for each deduction periods, the following totals:

• gross wages

• PAYE deductions