WHO IS REQUIRED TO KEEP RECORDS ?
Every person carrying on a business whether a sole proprietorship or a partnership is required to keep records.
WHAT DOES KEEPING RECORDS INVOLVE?
Keeping records involves:
- Setting up a system which could capture all business transact ions; and facilitate easy retrieval of all documents
- Maintaining the records throughout the year
- Retaining the records for at least six years, and these records must be kept in St. Lucia
WHY IS IT IMPORTANT TO KEEP PROPER AND SUFFICIENT RECORDS?
It is a good business practice to keep records because:
- The information will enable you to monitor the progress of your business
- When it is time to fill your income tax return, all the information you need will be readily available
- When the Inland Revenue selects your case for audit, it will be quicker and less disruptive if all information is easy to find.
HOW LONG MUST RECORDS AND BOOKS OF ACCOUNTS BE RETAINED?
Records and books of accounts are to be retained for a period of six years after the end of the income year to which such books of accounts or records of that business relates.
However, if there is an appeal against an assessment, the relevant records and books of accounts are to be retained until the appeal is finally determined.
Mary Lipstick operates a graphic design business. Her financial year ends on December 31. The accounts in respect of the business for the year ending December 31, 2004 must be retained for a period of 6 years until the year 2010.
7 Year Period
1/1/2004 – 31/12/2010
2005, 2006, 2007, 2008, 2009, 2010
WHERE SHOULD THE RECORDS AND BOOKS OF ACCOUNTS BE KEPT?
Records and books of accounts relating to any business in St. Lucia must be kept and retained in the place where the business is carried out.
IN WHAT LANGUAGE RECORDS AND BOOKS OF ACCOUNTS SHOULD BE KEPT?
Records and books of account should be written in English.
WHAT HAPPENS IF RECORDS AND BOOKS OF ACCOUNTS ARE NOT WRITTEN IN ENGLISH?
When requested by the Comptroller, a written translation has to be provided at the expense of the sole proprietor or partnership.
IN WHAT FORM SHOULD RECORDS BE KEPT?
Records can be kept in manual or electronic form. However, if records are kept on an electronic medium such record should be readily convertible into readable format.
IF RECORDS ARE STORED IN A COMPUTER, IS IT NECESSARY TO RETAIN ORIGINAL SOURCE DOCUMENTS?
In the case where you have converted records from manual to electronic form, you are still required to retain all those records in the original form. However, in the case where original records are kept in electronic form, records may be retained in such form.
IS IT NECESSARY TO KEEP ANY SUPPORTING DOCUMENTS?
Supporting documents such as sales and purchases invoices, cash bills, bank statements, payment vouchers, pay slips, cheque stubs, official receipts for payment, etc., must be kept to support your expenses or claims.
WHAT HAPPENS IF ADEQUATE RECORDS ARE NOT KEPT?
If sufficient records are not kept the consequences are:
- The Comptroller may require the individual carrying on the business as a sole proprietor or a partnership to have his accounts audited by a professional accountant at the individual’s expense.
- The chargeable income of the individual may be determined according to the best of judgment by the Comptroller and an assessment raised.
- The individual may be prosecuted for failure to keep records and, on conviction, may be liable to a fine of not less than one thousand dollars ($1,000.00) or to imprisonment for a term not exceeding one year or both.
It should be noted that the punishment in monetary terms is more than what it would cost to get an accountant to prepare one’s accounts.