How is your business managing the financial bookwork? Are all your ducks lined up in a row?
Do you send invoices straight out as soon as jobs are completed? Chances are, once you send out invoices – payments to you could be in the bank within the hour, or tomorrow. In these days of internet, online banking and credit cards mean payments are made pretty much within days. The days of snail mail payments, waiting for funds to clear, and evasive ‘the cheques in the post’ are pretty much gone. More businesses are paying online now.
So let’s make it easy for debtors to pay you. Ensure your business name, phone, email contact and payment information (including credit card payments being accepted) are displayed on the invoice. Don’t forget to show the Terms of Payment, e.g. ‘Seven Days from Date of Invoice’ – you really want to encourage early payment.
If you charge GST (or not) this must be clear on the invoice, and don’t forget the GST number. Address the person or proper business name correctly on the invoice in full. If you are having issues with invoices being paid or cash-flow issues – this Accounts Receivable blog may help you sort it out.
Receipts and Bills
You must keep records of incoming bills, and the payments of your bills and expenses. Keep receipts and dockets. Inland Revenue may request evidence of those bills, and bill payments – just the bank statements alone aren’t going to cut the mustard. Have a read of our invoicing blogs on what you need to keep for your business records.
Xero has a nifty feature where you can upload photo or online files to attach with each relevant transaction. Super handy if you’re fighting the paper war, especially as IRD requires you to keep your business records for at least seven years. If you have Xero, do make use of this feature – or if you don’t, but would like to know more – contact us, we’d be happy to explain this feature.
A reminder if your business is earning near or at $60,000 turnover, then you must get registered. Registration can be done online with Inland Revenue, or contact Do The Sums Bookkeeping and More for help. Once registered, you will need to be record and report on transactions over set periods of time to Inland Revenue, so bookwork maintenance becomes more cruical. A good habit of reconciling your business transactions on a regular basis, will help give you more time and notice of any due GST payments. (You really want to avoid late GST penalties being added to your bills).
If you are in ‘trade’, you must file an Annual Return with Inland Revenue, regardless of how much money you made or lost. Remember the issue isn’t “if you made money, you pay tax”. Think more, “if you did any trade, or received un-taxed income” then you will need to file a tax return for the business. If your business made a tax loss this year, you may be able to apply this loss against income in future years and reduce payable tax.
So … any un-filed tax returns for your business? Do get them in. Submitting your returns now, before Inland Revenue contacts you, may help reduce outstanding penalities. If you are worried about doing tax returns – our team are happy to sort your returns, including any outstanding returns for previous years.
You must have a separate account if your business is a company. Even Sole Traders should have separate bank accounts. Why? It makes bookkeeping processes clearer, transactions easier to reconcile and your bookkeeper or accountant will love you for it. The bank balance is easier to review, when only business transactions are run through that account. Think of the future – if you are going to sell the business, it will be an advantage to have clear, clean business bank statements to support your income claims.
Running a business can be a juggle at times, and it’s so easy to overlook keeping the bookwork tidy and in order. But really it’s important to ensure your business keeps records of transactions and keeps the ducks lined up. Get into good bookwork habits – keep the accounts reconciled often, file or capture your business bills and do your invoices often. The advantage of keeping all those ducks in line … is you’ll have a clearer view of how your business is doing month to month, too.
There are regulations on bookwork requirements, more so if you are a Company. Company Act regulations and NZ Tax Regulations can be hard to work through. Should you feel unsure of what is needed for correct bookwork or bookkeeping procedures necessary in running a business, give us a call and let us help you. We’d really love to help you grow your business, and help you manage your bookwork so if you are struggling or need some direction – give us a call.
Send me an email today or call me, Rebecca, on 027 379 0992 and we can talk about your requirements.