This is not the most exciting subject but something that all businesses must adhere to.
A business should have its own dedicated bank account. In the case of a company, the bank account must be in the company name as the company is a separate legal entity. The same applies for a Trust where the bank account needs to be in the Trust’s name or that of the Trustees.
You should keep the number of bank accounts you have to a minimum to make it efficient from an accounting perspective and to minimize bank fees. The Inland Revenue Department can request all your bank accounts too, so it makes sense to keep the number of accounts in both your personal and business names to a minimum.
If you are GST registered, you will need to ensure that you are including all the required information on the invoices you issue. These include – ‘Tax Invoice’ as opposed to ‘Invoice’ should be prominently displayed, your name & address, GST registration number, date of issue and description of goods / services provided. You don’t necessarily have to include the GST portion separately on the invoice, but if you don’t there must be a statement to say that the price is GST inclusive. For supplies over $1,000 you must include the name and address of the recipient of the supply, that is, your customer or client.
Inland Revenue require you to keep tax records (financial statements, bank and credit card statements, invoices, wage and employee records, lease agreements, loan statements and any other documentation in relation to the financial affairs of the entity) for seven years. However, this period can be extended by three years if there is an audit by Inland Revenue. The Companies Act requires companies to keep records for ten years.
Location and Format of Records
Records can be stored electronically which saves a lot of space (and trees). Many businesses use cloud storage like Google Drive, Dropbox and OneDrive which is a good option if the information is capable of being retrieved and produced upon request by Inland Revenue. Xero and MYOB (for instance), also have Inland Revenue authority to hold records on your behalf in electronic format. Although a third party may be used for document storage, taxpayers remain responsible for their tax obligations including retaining business records for the retention period.
If you have any questions about your requirements, feel free to contact us.