The video title Business Basics Record keeping slides in from the left.
The title slides to the right of the screen and is replaced by a person sitting at a desk with a laptop. File folders, a desk lamp and a mug also appear on the table. A clock ticks on the wall. 3 lights hang from the roof and there is a potted plant on both sides of the desk.
A circle appears above the person’s head with paper records inside it.
Easy listening style music plays throughout the entire video.
You probably didn’t start a new business because you wanted to do paperwork! But it doesn’t have to be a pain and it can contribute to your success. In this video, we’ll explain what you need to do to keep on top of your record keeping.
Jefferey is standing with a wrench in his hand. His work van drives in from the left with “Jefferey’s Plumbing” written on it and a picture of a plunger. A terrier dog walks in from the right
Meet Jefferey, he runs a successful plumbing company.
He loves chatting with his customers and driving around in his van with his Plummer Terrier.
He also makes time for record keeping.
Jefferey is sitting in a home office working on his computer, the terrier is lying down at the bottom right of the screen.
The following icons appear above Jefferey’s head showing what he keeps records of:
- tax invoice
- bill due
- cash received
- expenses receipt.
The records merge and get filed in a filing cabinet.
An electronic notification icon pops up. A download icon appears showing that Jefferey downloads electronic records, then a lock icon appears showing Jefferey stores electronic records securely.
A circle with “7 tax years” is shown as this is how long records must be kept for. A calendar is then displayed showing a standard tax year runs from 1 April to 31 March the following year.
He keeps a record of every business transaction, including all cash and non-cash sales and expenses.
Jeffrey files his paper records at the end of the day (otherwise they’re likely to be trampled by his terrier) .
If someone sends him a record electronically, he saves it to his computer which he regularly backs up.
Jeffery tucks his records and financial statements away safely, just in case we need to see them.
All records must be kept for at least seven tax years.
A normal tax year is the 12 months between the first of April and the thirty-first of March.
Jefferey is shown entering his records into his software package on his computer. Circles with a tick inside them appear next to different entries in his accounting software showing things are done automatically making record keeping much simpler.
The computer exits the scene and is replaced by 2 circles, one with an Income tax return inside it, the other a Financial statements summary form - IR10. The filing cabinet is shown with the record icons, showing everything is in one place to make completing his tax return and IR10 easier.
These days Jeffrey also enters everything into an accounting software package.
He finds it easier as most of the work is done automatically and it makes it easier to do everything correctly.
To meet his tax obligations, at the end of the tax year, Jeffrey files his company’s income tax return and an IR10 financial statement summary form.
He prepares his financial statement from the business records he’s organised throughout the year.
A line and pie graph are shown plotting financial performance and business strength.
The graphs are replaced by 2 circles, one with a profit and loss statement inside it, the other a balance sheet.
Three circles are displayed to show what a profit and loss statement has on it. On the left is “Gross income”, the middle “Expenses”, and the right “Net profit” .
The net profit circle then slides onto an Income tax return.
Financial statements are records that clearly outline the financial performance and strength of your business.
Most businesses prepare a profit and loss statement and a balance sheet.
The profit and loss statement shows gross income, expenses and net profit.
You include your net profit in your income tax return.
A circle appears with a balance sheet inside it. A circle appears on each side of this showing what a balance sheet has on it. On the left is “Business assets”, on the right is “Liabilities” .
A checklist to make sure you meet the minimum reporting requirements and a pie graph showing a tax obligation are shown.
A laptop appears displaying our web address ird.govt.nz
The balance sheet shows your business assets and liabilities at the end of the tax year.
Financial statements must meet minimum financial reporting requirements to ensure you pay the right amount of tax.
You can find more information about these requirements on our website ird.govt.nz
Jefferey’s accountant, Sarah, is shown sitting at a desk in her office working on her computer. Jefferey enters the scene from the right. A plunger falls from the top of the screen into Jefferey’s right hand.
Two circles appear, one has Jefferey’s records, the other his accounting software entries. The 2 circles merge leaving just the software entries. A circle appears on the top right with a dollar symbol inside it showing Jefferey is saving money by keeping good records.
Financial statement icons appear next to Sarah showing she is completing these easier thanks to Jefferey’s record keeping. An exclamation mark and lightbulb appear on the financial statements showing possible business problems and opportunities can be identified by the financial statements.
Sarah’s desk slides to the left and the terrier enters from the right, they are having a discussion. A speech bubble appears above Sarah and shows a dollar symbol with an upward indicating suggestions for business growth. This is then replaced by a line graph curving down showing reduced business risks.
Preparing financial statements can be a bit tricky so Jeffrey gets his accountant Sarah to do it which allows Jeffrey to focus on what he does best, plumbing!
Because his records are so well-organised and entered into his accounting software, Jeffery saves money on accounting fees.
Sarah prepares the financial statements to meet the requirements.
Financial statements aren't just about tax.
Jeffery can use them to identify potential problems and opportunities in his business.
Every year, Sarah advises Jeffrey on ways he can grow his business and reduce risks.
Jeffrey's plumbing business is going from strength to strength.
Two laptops appear. One has business.govt.nz on it, the other ird.govt.nz
The video ends with the Inland Revenue Te Tari Taake logo.
Wrapping up, go to business.govt.nz to access tools and resources to help your business.
And you can always learn more about tax at ird.govt.nz.