Good records are the foundation of every return
Inland Revenue requires businesses to keep records that support income, expenses, GST and tax returns. Current guidance says records, including electronic records, generally need to be retained for at least seven tax years. Records should be in English or Māori unless approval is obtained for another language, and offshore storage or cloud arrangements must meet Inland Revenue requirements.
Record keeping is not limited to invoices and receipts. A complete file can include sales records, bank statements, contracts, loan documents, payroll reports, asset purchases, vehicle logs, home-office calculations, shareholder transactions, stock records, GST returns, tax calculations and correspondence with advisers or Inland Revenue. The exact evidence depends on the transaction and the business activity.
Organise records by workflow, not only by month
A folder containing thousands of unsorted PDFs is technically a collection of records but not an efficient accounting system. Organise documents so they can be connected to the transaction, return and financial statement line they support. Use consistent filenames with the date, supplier or customer, document number and amount where useful. Keep permanent documents such as loan agreements, leases and company records separate from recurring monthly invoices.
Cloud accounting systems can store documents against transactions. Receipt-capture tools can extract data and publish it to the ledger. These tools improve accessibility, but they do not remove the need for review. Check that the image is readable, the supplier and date are correct, GST evidence is sufficient and the document is attached to the final posted transaction rather than a duplicate or draft.
Create a monthly document completeness check
At each month-end, compare bank transactions with attached documents and the expected recurring expenses. Follow up missing supplier invoices, cash purchases, expense claims, credit notes and sales records. Reconcile payment gateways and online platforms to the accounting system. For payroll, retain approved changes, timesheets or inputs, payroll registers, payment evidence and filing confirmations.
Maintain a query list that identifies the transaction, date, amount, missing evidence and person responsible. Do not leave unexplained items in suspense indefinitely. Where evidence cannot be obtained, the local adviser should decide the appropriate accounting and tax treatment and document the limitation.
Protect sensitive data and manage access
Accounting records contain bank details, employee information, tax identifiers and commercially sensitive data. Use named user accounts, multi-factor authentication and least-privilege access where systems permit. Avoid sharing passwords or sending confidential documents through ordinary public forms. Review access when staff, contractors or advisers change roles.
Backups and retention should be planned. Cloud software availability is not the same as a complete backup strategy. Export final annual reports, tax returns, general ledger data, attachments or archive files where appropriate, and confirm who is responsible for retention if a subscription is cancelled. If records are stored offshore, check Inland Revenue’s approval requirements.
Prepare a year-end archive that can be reopened
At year-end, retain the final financial statements, tax return, IR10 where applicable, GST returns, payroll summaries, depreciation schedule, trial balance, general ledger, reconciliations, key contracts and the final workpaper pack. Record the software version or export format and make sure files can be opened without relying on one employee’s personal account.
A well-organised archive reduces the cost of future reviews, amendments, finance applications and business sales. It also improves the next accounting year because opening balances and prior-year treatments can be verified quickly. The best record-keeping system is one that a new preparer can understand without relying on undocumented memory.