What types of records do I need to keep?
How long do I need to keep records for?
What is petty cash?
Do I need to keep a cashbook?
Do I need an accounting system or an accountant?
Do I need to keep all my receipts?
Do I need an accountant?
How do I choose an accountant?
How do I get the best from my accountant?
How often should I do a stocktake?
A cash book which will record all cash receipts and cash payments, a bank deposit book, a cheque book, bank statements, a car log book ( if claiming a car deduction), a wages book. Under tax law, a person carrying on a business must keep records that record and explain all transactions.
These records include any documents that are relevant for the purpose of ascertaining the person's income and expenditure. The person must keep the records in writing in the English language, or enable the records to be readily accessible and convertible into writing in the English language.
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Any books of accounts, records or documents relating to the preparation of your income tax return must be retained for a period of at least five years from the date of lodgement of your last return in which a claim is based on those records.
Where practical, you should make all payments by cheque. However, small spending on items such as petrol and stamps etc can mean using cash. A method of accounting for these small and irregular expenditures is the petty cash system. You do need to keep receipts and documents for petty cash claimed.
Yes, although it is called a cashbook, it is the book in which you should record all your business transactions – whether they are by cash, cheque or credit card. A cash book is generally in two parts: one section for cash receipts, that is money coming in to the business; the other for cash payments – the money going out of the business.
In business it is advisable to have both an accountant and an accounting system which suits your needs. The accounting system you have should reflect the type of business you're in: if you have a low volume of sales the basic bookkeeping can be done manually. If you have a high volume of sales (especially credit sales) it would be advisable to look at a computer based accounting system. In any case, with the increased demands for accurate record keeping and reporting under the new tax system, most businesses should consider a computerised accounting system. Your accountant should be able to guide and advise you of your accounting needs, and even if your accountant is providing a full accounting service, it is important that you understand the basis of the system and the significance of the information it provides.
If you are self employed not all receipts are accepted by the Tax Office as proof of your deductions. To be a valid receipt for tax purposes it must show the date of the receipt, the date of the expense, the name of the supplier, the amount and the description of what you bought.
Most people will use an accountant for taxation purposes, but a good accountant is aware of the economic, legal and financial environment affecting your business, so you should use their knowledge and expertise to anticipate changes and plan for survival and growth.
There are a number of ways you can choose an accountant, you can ask your friends or business associates, or get a referral from the Business Advisory Service or a professional body. When choosing an accountant you should establish whether they have experience dealing with similar businesses, ask what they can offer – their range of services and any areas of special expertise. You need to be able to communicate easily with them and you need to ask for an estimate of the likely costs for services to be performed.
A good business accountant can help you with evaluating a business proposal and preparing a business plan. They can also assist with preparing cash flow budgets, advising you how to use them to manage your business better, they can also help you with pricing and costing your products or services and with comparing your actual performance with your projected performance and how you can improve.
A physical stocktake needs to be done periodically to be sure that the actual quantities of stock are equal to the amount of stock shown on the inventory records.
After a stocktake, the inventory records are adjusted to reflect any difference between the physical inventory and the records. It is necessary to keep accurate records of the stock so that you can detect if there is any theft of stock or if you are not receiving the correct amounts from your suppliers.