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Record keeping may sound like a bore, but it is essential for your startup. Good record keeping can save you time, money, and frustration in the future. Consequently, it helps you seem organised and professional to potential investors in the startup world and protects you from trouble during an audit. Therefore, keeping records is your responsibility as a startup owner and is crucial if you ever face issues of fraud or theft. This article will outline some primary records your New Zealand startup company needs to keep, including the key record keeping and reporting requirements under the Companies Act (the Act).

Company Records Under The Companies Act

According to the Act, in New Zealand, a company must keep documents at its registered office. Additionally, you should file the documents on the Companies Office website and notify the Office if you make any changes to the documents. Finally, you should also keep documentation records for seven years. These documents include:

  • company constitution (if your company has one);
  • minutes of board and committee meetings held within the last seven years;
  • interests register;
  • resolutions of shareholders and directors;
  • director certificates;
  • full names and addresses of current directors;
  • written communications to all shareholders;
  • copies of financial statements; and
  • accounting records.

Share Register

Under the Act, startup companies in New Zealand must maintain a share register that records shares issued by the company. Therefore, if you do not maintain the share register, you can be penalised under the Act. Furthermore, you must also record the details of share issues and transfers at the Companies Office. The share register must state:

  • names and addresses of a shareholder;
  • number of shares held by each shareholder; and,
  • date of issue, transfer, or repurchase of shares by each shareholder.

Accounting Records

Under the Act, you must ensure that accounting records are kept accurately. Correspondingly, the records must be written in English or so that you can easily translate them into English. Further, your startup must establish and maintain a satisfactory system of controlling its accounting records. Specialist accounting software can assist with maintaining accounting records and determining the business’s financial position with reasonable accuracy. Accounting records should:

  • record transactions of the company;
  • enable the company to ensure that financial statements comply with generally accepted accounting practices; and,
  • enable financial statements to be audited.

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Other Records to Keep

In addition to the Companies Act obligations, there are other records that New Zealand startups should maintain to avoid the risk of penalties and other potential liabilities. Not only does maintaining good records allow you to comply with legal obligations, but it also makes specific tasks more manageable, such as calculating expenses and tax obligations. Thus, you must keep records in either English or Maori.

Record Books  

Inland Revenue (IRD) needs record books to check your accounts if needed. Additionally, these may also help you to complete your annual return. Among other matters, books may include:

  • staff wages;
  • business deposits;
  • cash books – showing internet banking, cheque, and direct credit;
  • petty cash books – these show cash available for expenses and what the cash was spent on;
  • who you owe money to; and,
  • who owes you money.

Income and Expenses  

You must keep accurate and complete records of income and expenses for at least seven years for IRD. Records of income include:

  • tax invoices;
  • credit card sales;
  • debit notes;
  • credit notes;
  • receipts; and,
  • revenue (all cash and non-cash sales).

Records of business expenses include:

  • tax invoices for purchases of more than $50 if you want to claim it in your GST return;
  • payment evidence (invoices, receipts); and,
  • credit card purchases.

Bank Records 

Keeping bank records is vital to help you prepare GST returns and update details in your cashbook. Furthermore, you can show IRD the cash flow from your business and personal bank account through bank records. You will also need to keep all relevant paper records even if you are storing records electronically. Bank records may include:

  • cheque book stubs;
  • deposits;
  • bank statements for your business and personal accounts;
  • credit card statements;
  • loan details; and
  • interest statements;

Financial Reports

Financial record keeping helps keep everything organised and controlled and is essential if IRD carries out an audit on you. Thus, having organised financial records can also help you attract and impress potential investors when seeking venture capital. Financial records can include a:

  • balance sheet of assets and liabilities;
  • profit and loss statement; and
  • statement of accounting policies.

Legal Documents

It is vital to have copies and evidence of your legally binding documents to refer to them in the future. Undeniably, having such documents on hand can help if you find yourself in a legal battle or if complications arise in business matters. You may have legal documents such as:

  • lease agreements;
  • intellectual-property documentation;
  • sale and purchase agreements;
  • privacy policies;
  • employee contracts;
  • non-disclosure agreements;
  • business formation documents;
  • trademark registration; or
  • patents.

Personnel Records

If your startup has employees, you may consider having personnel files. Personnel files record details concerning your employees and must be kept for at least six years. Additionally, such files must be made available to your employees or the employee’s union if requested by your employee. Personnel records should include the:

  • employee’s name, address, and age if they are under 20 years old;
  • signed employee contract;
  • employee’s completed tax code declaration;
  • wage payment method and amount;
  • leave entitlements; and,
  • amount of time worked.

Key Takeaways

Good record keeping practices can help your startup stay up to date and manage the risks of potential legal liabilities. Records should be complete, accurate, and kept for at least seven years under the Companies Act or if IRD requests to see it. Relevant records include:

  • share register;
  • documents under the Companies Act;
  • accounting records;
  • record books;
  • income and expenses;
  • bank records;
  • financial reports;
  • legal documents; and,
  • personnel files;

If you need help understanding what records your New Zealand startup is required to maintain under the Act, our experienced startup lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers who can answer your questions and draft and review your documents for a low monthly fee. Call us today at 0800 005 570 or visit our membership page

Frequently Asked Questions

Which financial statements should I be recording?

You should be recording balance sheets for assets and liabilities, profit and loss statements, and a statement of your accounting policies if you have one. You will need to keep these for IRD and also to show your startup’s ongoing financial position. 

Should records be kept through paper or electronically?

The best option is to have paper and electronic copies in case something goes wrong. If your files are accidentally deleted, you still have the paper copy, or if you misplace the paper copy, you will still have the electronic copy. For bank records specifically, it is a requirement by IRD to have all relevant paper copies of your bank records.

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