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Inland Revenue's logo appears, and the words "An Introduction to Business" pop up at the bottom of the screen. These words are quickly replaced by the title of the video "Record Keeping" which slides in from the right.
An introduction to business. Record keeping.
An image of a document called "Record Keeping" drops into the centre of the screen. The image receives a tick.
Don't stress out about the paperwork! In this video, we explain what you need to do to keep on top of your record keeping.
Jeffery walks into his office, carrying a spanner. We see a filing cabinet and a desk with a computer on it. A heart image floats upwards, indicating Jeffrey's love for his job. Images of paper records are stacked on top of one another in the centre of the screen.
Meet Jeffery! He runs a successful plumbing company. He loves his work, but also understands he needs to make time for record keeping. He keeps a record of every business transaction including all cash and non-cash sales and expenses.
The paper records drop into the top drawer of his fling cabinet. One record flies across the room to appear on the screen of his computer. The words "7 tax years" pop up in a white circle next to Jeffrey.
Jeffery always files his paper records as soon as he receives them. If someone sends him a record electronically, he saves it to his computer and regularly makes a back-up. All records must be kept for at least seven tax years.
The camera zooms in on the computer screen. We see Jeffrey's accounting software package. The curser clicks on a button and a tick appears, indicating the data has been entered correctly. Jeffrey's income tax return and IR10 form drop down onto the computer screen, then move away again, indicating they have been filed with Inland Revenue.
These days, Jeffrey also enters everything into an accounting software package. He finds it easier as most of the work is done automatically, and he makes far fewer mistakes.
At the end of the tax year, Jeffery needs to file the company's income tax return and an IR10 Financial statements summary form. He needs to prepare his financial statements from the business records he has carefully organised throughout the year.
A question mark appears on the computer screen, followed by the words: "Outline the financial performance and strength of your business". The computer screen drops away and we see images of a profit and loss statement and balance sheet. Words appear under the profit and loss statement, "Gross income, Expenses, Net profit", and the balance sheet, "Business assets, Liabilities".
What are financial statements? They are records that clearly outline the financial performance and strength of your business.
Most businesses prepare a profit and loss statement and a balance sheet. The profit and loss statement shows gross income, expenses, and net profit. You include your net profit in the income tax return.
The balance sheet shows the business's assets and liabilities at the end of the tax year.
The profit and loss statement and balance sheet merge. Inland Revenue's web address appears.
Financial statements must meet minimum financial reporting requirements to ensure you pay the right amount of tax. You can find more information about these requirements on Inland Revenue's website.
Sarah joins Jeffery. Jeffrey's records are shown receiving a tick. A dollar sign indicates how his good record keeping has saved money. The records move across the screen to Sarah. A padlock pops up next to Jeffery, illustrating how his records are stored safely.
Preparing financial statements can be a bit tricky, so Jeffery gets his accountant Sarah to do it, allowing Jeffery to focus on what he does best - plumbing!
Because his records are so well organised, Jeffery saves money on accounting fees. Sarah prepares the financial statements to meet the minimum requirements. Jeffery makes sure all his records and financial statements are kept safely, just in case Inland Revenue needs to see them.
Jeffery and Sarah remain on screen. Two images, an exclamation mark and an upward-trending profit line illustrate risks and opportunities in Jeffery's business. Two trucks drive past - proof that his business is expanding. Again, his records receive a tick.
Financial statements aren't just about tax. Jeffery can use them to identify potential problems and opportunities in his business. Every year, Sarah advises Jeffery on ways he can grow his business and reduce risks.
Jeffery's plumbing business is going from strength to strength. One reason for his success is a good record-keeping system.
Closing sequence. You see Inland Revenue's web address and reference to the Tool for business. Then you see the Business.govt.nz web address and reference to its Start-up health check. The video closes with Inland Revenue's logo and web address, followed by the New Zealand Government logo appearing at the bottom of the screen.
If you'd like more information, please visit Inland Revenue's website. Our tool for business has a section on record keeping.