Keeping tax records

You’re required to keep all your records, whether they’re in electronic or paper form, for a minimum of seven years.

Even if you have a bookkeeper or accountant, it is important that you know which records you need to keep.

These records may include:

• invoices
• receipts
• wage books
• petty cash
• banking records
• vehicle logbooks
• asset registers and depreciation schedules
• emails, eg arranging business meetings — especially if you’re claiming for travel expenses to another city or overseas.

If you’re registered for GST, it’s important to have tax invoices for your expenses so you can claim back the GST. However, you don’t need a tax invoice for income and expenses under $50. Remember, you must keep records that support your expense claim if you’re registered for GST.

It’s good practice to keep a record of the date, description, cost, and supplier for all business purchases, regardless of whether you’re registered for GST or not. Make sure to keep copies of anything you send to Inland Revenue, which can be easily done through the MyIR service.

Lastly, hold on to any calculations you’ve made to complete your tax return, such as determining your home office expenses.

Keeping records — Inland Revenue

What you can claim if you work from home

Managing your finances

When you’re caught up with the day-to-day operations of your business, it’s easy to neglect paperwork. However, keeping a good system and staying organised can simplify the process of filing your tax and GST returns.

Using packages and apps can be beneficial for recording your income and expenses, and the cost of these tools is tax deductible.

If you don’t have many transactions, spreadsheets can be an effective alternative.

Tool for Business downloads: Cashbook template — Inland Revenue

Keep physical copies of your records attached to your GST return for the relevant period.

This ensures that if Inland Revenue requests to see them, you’ll have all the information readily available.

Inland Revenue’s website provides additional information about record-keeping and claiming expenses:

• Smart business guide (IR320)
• Record-keeping checklist 

• Failing to keep all the necessary records can lead to serious consequences. In the case of an audit, not having proof of the claimed items can result in hefty penalties or legal action.
• Poor record-keeping systems or neglecting to maintain records regularly can also lead to disorganised records and important information loss.
• Not keeping your records for long enough — you must keep everything for at least seven years.