Record keeping for small business
Good record keeping is essential for anyone in business because it makes it easier to manage your cash flow, meet your tax obligations and understand how your business is doing.
What the law requires
By law your records must:
- explain all transactions
- be in writing (electronic or paper)
- be in English or in a form that can be easily converted
- be kept for five years (some records may need to be kept longer).
If you don't keep the right tax records, you can incur penalties.
How to keep records
You can keep invoicing, payment and other business transaction records electronically or on paper. The principles are the same for each, but keeping electronic records will make some tasks easier.
With the right electronic record-keeping software you can:
- automatically tally amounts and provide ready-made reports
- produce invoices, summaries and reports for GST and income tax purposes
- keep up with the latest tax rates, tax laws and rulings
- report certain information to us online
- save on physical storage space
- back up records in case of flood, fire or theft.
If you intend to use a bookkeeper or accountant, get their advice about the best system for you – choose a system you can understand and operate easily.