An easy way to keep business records

A simple system to keep your business records under control. Buy seven cardboard A4-size storage boxes. Label them:

§  Bank statements, cheque books, deposit books

§  Invoices - paid

§  Invoices - unpaid (that is, your debtors)

§  Bills - unpaid (that is, your creditors)

§  Bills - paid (including invoices for purchases, credit card purchases)

§  Petty cash receipts

§  Others.

Each box should be dated for the current tax year.

You'll also need:

§  A wages book for employees

§  A cashbook for day-to-day operations

§  A business diary.

How you actually file things is up to you.

A suggested simple method to file things

Invoices

Make two copies of each invoice you send out. Send one to the person/business who owes you money and file the other copy in the 'Invoices - unpaid' box.

When payment is received (perhaps a cheque arrives or payment is made electronically) pull out the relevant invoice and write the date and relevant the cheque number on it, then transfer it to the 'Invoices - paid' box.

Store these paid invoices for seven years, as required  Inland Revenue, and then recycle the box back into your system.

Bank statements

Check these against your cheque butts and then store them in the 'Bank Statements' box. Before you store them, transfer the information concerning bank charges, automatic payments etc into your cashbook, and then do a bank reconciliation.

It's a good idea to code the entries on the statement so your accountant can check them quickly. For example, the telephone payment might be coded 01, the power payment 02, car expenses 03, and so on. The best way to save money on accounting fees is to use the same code as your accountant (so it's familiar to them), so ask them for their coding system before you start.

Keep your used cheque butts and deposit books in this same box. An accountant's tip: the clearer the details on your deposit and cheque butts, the easier it is for your accountant to follow what you've done. That means lower accounting fees. So remember to fill in those cheque and deposit butts with a full explanation of what the money was spent on, or where it came from (in the case of a deposit) and which invoice it settled.

If you are paying using internet banking, include as much information as you can in the references boxes (such as which invoice you are paying) as this will show up on your bank statements.

Bills

When tax invoices arrive, file them in the 'Bills - unpaid' box.

As you file each bill, make a note of the amount and its due date on the relevant page of your business diary.

Jotting down due payment dates for bills in your business diary helps you:

§  manage your cashflow (you can page through the diary to check on your future cash commitments)

§  pay on time and thus keep your credit lines secure

§  avoid missing any discounts on offer for early payment.

When you're ready to pay the bill, take it out and write the date paid and your cheque number on it. If you are paying using internet banking, then print out the 'confirmation' page and attach it to the invoice in lieu of a cheque number. Then transfer the invoice to the 'Bills - paid box' and keep it for the required seven years.

This box should also contain invoices for items you paid for using eftpos, credit cards or internet banking. Remember, if you buy something using eftpos or your credit card make sure you get a tax invoice as well as transaction record as you need this for invoice for your records.

Others

This box can be used to store other information you are required to keep. Some of this information may be kept electronically. But you may want to print out hard copies for back-up purposes.

§  cashbook (and other any bookkeeping workings such as journals and ledgers)

§  wage book, if you're an employer

§  details of entertainment expenses for clients, staff or suppliers

§  till tapes and day books

§  stocktake figures

§  list of debtors and creditors

§  interest and dividend statements

§  list of assets and liabilities

§  depreciation schedules

§  final profit and loss statements and balance sheets

§  any other documents that confirm entries in your accounts, such as worksheets.

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Preparing a business plan

Your business plan is a management tool and is designed to suit the structure and needs of your particular business. There is not a one-size-fits-all business plan, or a set formula that you have to follow.

This leeway to design your own business plan can feel quite daunting at first, but this is easy to solve if you identify the reasons why you need a business plan. These could include setting business goals and objectives, establishing performance requirements and assessing whether these have been achieved, or communicating messages to people inside or outside your company.

The structure of your business plan

A business plan usually serves a number of purposes. It is a good idea to identify the purposes you’d like your business plan to achieve because this could affect how you choose to structure and write your plan. For example, you’re likely to focus on different information depending on whether your plan is intended as an internal document for management to refer to, or to raise finances from an external source.

Use the three business plan structures in the table below to find the best structure for your business. Since there is not a set way to structure a business plan, the format is one of personal preference. You might find one outline is more suited to your business than another.

If you’re writing your business plan as part of the process of applying for a loan, it is a good idea to include a one-page cover letter. The cover letter should include the following:

§  The type of loan you are looking for

§  The amount of the loan and period you wish to borrow the money

§  What you need the money for

§  A reference to the business plan attached.

If you are applying for a loan, you will probably also need to include more detailed personal information, including your  IRD number, bank accounts, assets, liabilities and other business interests.

Writing your business plan

Keep your business plan as short and simple as possible. Use simple language and short sentences so that it is easy to understand, and edit your draft to remove unnecessary words. Use bullet points or tables if this makes ideas easier to read or understand.

Present your facts and information so that they flow logically rather than jump around, and make sure that the information presented in different sections supports each other. You don’t want to present information that does not add up or raises questions about the accuracy of your plan.

Do not give in to the temptation to overstate the truth, and bear in mind that the figures you present will need to back up the words in your business plan.

Start by jotting down points and ideas under each of the headings you plan to include in your business plan. Then sort these ideas so that there is a logical flow. At the same time, look out for any gaps or weaknesses and fill them in with the necessary research.

Start writing your business plan as soon as possible and keep refining and editing your work to keep it as short, simple and easy to understand as possible.

Writing your executive summary

Your executive summary is a very important part of your business plan. It is the first section people will read, and provides a brief but complete overview of your entire business plan. Because it contains reference to the entire business plan, the executive summary is usually written towards the end of the business plan writing process.

Your executive summary should be less than three pages, simply written and to the point, with an emphasis on the key issues of your business plan and a focus on the areas that will make your business successful in a competitive market.

Use your plan’s table of contents to map out your summary, and elaborate on the areas that are important. It is a good idea to end your executive summary with a short statement of why your business is poised to be a success.

The table of contents

The table of contents will appear before or after the executive summary. It is a list of headings with page number references that help your reader locate specific information in your plan. The numbering of the headings in your table of contents is one of the last things you will do when finalising your business plan.

The presentation of your business plan

The presentation of your business plan could be one of the first impressions someone gets of your business. It is a good idea to include a cover page and to bind your business plan with a cardboard or plastic front and back cover so that it is professionally presented.

It is also important that the layout is neat and professional looking and that the pages are numbered. Spend a little extra time on the presentation of your business plan to ensure it presents your business in the best possible light.

Does my business plan need an external review?

Your business plan does not need to be approved or verified by anyone, but it is a good idea to let a few people read your draft business plan before you finalise it and print it out.

Paying to have your business plan professionally proof read will ensure that it is free of embarrassing spelling and grammatical errors. Asking your accountant and a few business acquaintances or mentors to read through your plan will also help to identify any inconsistencies or gaps in the information.