Bookkeeping and GST – Saving You Money with Easy Record Keeping – Part 2
To be able to claim the GST on a purchase over $50 you must retain the tax invoice. For purchases less than $50 a bank statement entry (assuming there’s sufficient narrative) should be sufficient – though it’s always best to keep the invoice or receipt. As a GST registered supplier you are required to charge GST on virtually all goods and services and supply a GST invoice for each sale. What you are required to include on your GST invoice depends on the value of the invoice so talk to us to ensure your invoicing meets IRD requirements.
Making Life Easier and Less Costly
Here are a few tips:
Bank Accounts. For most businesses three bank accounts should be sufficient e.g. a cheque account, a savings account for tax and a business credit card. Having multiple bank accounts typically causes more problems, takes unnecessary time AND incurs additional costs.
Cash Expenses. Avoid cash expenditure which can miss the boat. If you have to use cash in emergencies see below re reimbursements.
Personal Transactions. The number of personal transactions or drawings payments from business bank accounts should be kept to a minimum as this will increase your costs and often results in confusion. It’s best to take regular (weekly, fortnightly or monthly) drawings based on your profit expectations for the year (if you’re not sure talk to us to help identify your likely profits) by transferring money to your personal bank account(s) from which you can draw or spend as many times as you like.
Reimbursements. Sometimes cash or a personal credit card might be used for a business expenses (hopefully irregularly or by mistake!) The easiest way to make sure these expenses are not omitted is to complete a monthly Expenses Claim on which you list all expenditure not from business bank accounts and attach all receipts for the month and then reimburse yourself from the business bank account. We can supply you with a suitable template Expenses Claim.
Keeping Records. It’s always best to keep ALL of your invoices and dockets and not just those for transactions over $50. A simple filing solution could be a folder with two, six or twelve dividers representing each of the GST periods and then file all invoices, bills and receipts in the appropriate GST period.