THE TWO METHODS OF RECORD-KEEPING
I. The Paper based Method
This is a method of keeping all invoices for sales and for purchases as well as all your cheque stubs and bank statements. It would probably be wise to use a cashbook to record all your sales and income.
If this method of record keeping is chosen make sure that all records are kept in a safe and organized way e.g. keeping your paid invoices in the order that they are paid or in the cheque stub order. All your records must be clearly written and easy to read.
It is also recommended that records be kept in a filing cabinet but you could also keep them in any other safe place that is easily accessible.
II. The Computer Method
The second method of keeping records is by using a computer. Depending on the nature and size of your business, using a computer bookkeeping program (such as Quicken) can improve your record keeping. A number of benefits can be derived in using a computer in your business:
- information is easy to find.
- records can be updated quickly
- less storage space is needed as less paper is required.
- you can keep a check on the accuracy of records you’ve kept and you can produce accounts
Today there are a number of accounting and bookkeeping packages to choose from. The major software manufactures also provide standardized business software that include spreadsheets, databases and word-processing packages.
Before buying a computer seek advice on the hardware and software which would be most suitable for your business needs. Speak to people who already use a computer in their business.
Remember that, even though you keep records on computer, you must still keep your source documents i.e. cheque stubs, invoices and bank statements to substantiate your income and expenses.
It should be noted that computers do have weaknesses, and it is always wise to back-up all information you have on computer, in case of power failure, fire, floods, theft etc. This means copying the information on your hard drive onto a diskette or ensuring that you have a print-out of vital information on a regular basis. Keep these copies on the disk at another location e.g. another building.
IRD ASSISTANCE SERVICE
The Inland Revenue Department has a Taxpayer Service Unit that would answer any tax queries regarding:
- What records to keep
- How to complete your income tax return form and PAYE remittance form.
- When to file returns and make payments
- Any other queries.
Anyone in business can expect an audit to be conducted at some point in time. This involves a staff member from Inland Revenue checking your records against the Income Tax Returns you’ve filed to ensure that your Returns have been correctly filed. The audit can cover Income Tax, PAYE, VAT, Contract Tax, Withholding Tax, Travel Tax, etc.