Got piles of paper stacked all over the house?
Even though we are moving more and more to a paperless society it is amazing how much paper we still accumulate in trying to run a business.
How many times have you considered sorting it out or been tempted to bin the lot?
Exactly what are the legal requirements for record keeping?
Basically Inland Revenue require you keep to all your tax records for 7 years. They have authority to access all of these records and all forms of media on which this information is stored so the records need to be maintained in a form that can be retrieved without delay or cost to Inland Revenue.
Tax records include any information or document about:
- Assets and
This is a pretty broad definition and can amount to a fair bit of paperwork so, to keep with the times; the form these can be kept in has expanded to include electronic records such as scanned documents, computer files and files in the cloud. For further details on the requirements see here .
Some of the cloud computing providers such as Xero and MYOB have been given special authority to store the data offshore but this still needs to be readily accessible to Inland Revenue. If you store records offshore and your provider is not on the approved list you will need to apply to IRD for approval.
Here at BW thanks to a great effort from Pete we have scanned and reduced the bulk of our paper records and now have a couple of extra walls that need to be painted. It is a great feeling to clear that much space. You just need to be aware that you are still legally responsible for the storage of your records, so whichever method you choose, looking after them and keeping backups is crucial.
This is particularly an issue for the subscription based cloud computing options. It is fantastically convenient to scan your invoices straight to the system, possibly directly from your phone, without ever having a paper copy, but then what happens if you stop your subscription? As well as saving all the relevant reports and transaction details you would need to retrieve all the invoices that have been scanned onto the system. So like with any of the other methods backups are essential.
After 7 years you can ditch the lot. Although we still recommend keeping important records such as property/business sale and purchase agreements permanently (where you can retrieve them) as they can often be required well beyond the 7 year time frame.
If you have any queries about the records you have and what you need to keep give Peta or myself a call.