Tax compliance: how to have a happy relationship with IRD
There’s no two ways about it; if you run a business, then you might as well embrace your relationship with Inland Revenue as it’s not going anywhere! Whether you’re in the retail sector, or professional services, what will help this relationship from spiraling is the same: IRD like to see clear-cut systems around record keeping that remove room for error and miscalculation. Easy, right…?
What are ‘business systems’?
When we talk about business systems, we mean procedures that ensure your business maintains consistent and accurate records. In IRD’s words: ‘better books, better business’. IRD are particularly interested in systems around financial record keeping, eg:
- Invoices and receipts
- Stock and inventory
- Vehicle logbooks
- Asset records
- Payroll records
- Employment records.
Implementing a record keeping system could be anything from setting up an excel spreadsheet, to installing new cloud based software. Technology has been life changing for many businesses when it comes to record keeping – there’s many different software solutions to cover any aspect of a business!
IRD have put together a handy record keeping checklist for business owners.
Even if you aren’t doing anything wrong, IRD are more likely to become suspicious and investigate further if you aren’t demonstrating transparent systems. IRD see it as mitigating risk – there’s more room for miscalculation when good practices aren’t in place, so it’s more likely that they will find errors when they audit. Remove the risk and remove the likelihood that IRD will come knocking and cause disruption to your business.
Write it down
It’s simple, if your business has documented systems in place, then it’s more attractive when selling. Potential buyers can easily see the procedures that have been maintained and the records. An operations manual with detailed protocol is a big task, but worth it in the long run. Consider uploading the manual onto an online portal, where it’s accessible for all employees, can be updated easily, has a search function and the ability to impose security restrictions. The days of a big, outdated printed manual gathering dust on the shelf are over!
Not my strong point…
We get it – not everyone is system minded, or sometimes business owners are so ‘deep’ within their business, it’s hard to see the forest from the trees. It’s important to remember that just because you’re the owner, doesn’t mean you have to be good at everything. System development, review and implementation is a task that can be delegated within a business either internally or externally through a consultancy business. Don’t feel you have to muddle through alone if you don’t have the time, skills or energy to dedicate to the task – get someone else to set up record keeping systems, which you (or an employee) can then maintain.
We can investigate whether there’s room for improvement with your financial systems and processes. From getting your book-keeping in order to training your employees on using your accounting package correctly, we can help. Let’s talk – we’d love to hear from you.