As a director, the law makes you
personally responsible for keeping proper company records.
You must see that the company keeps up-to-date
financial records that:
correctly record and explain its
transactions (including any transactions as a trustee), and
explain the company’s financial
position and performance.
All companies must have financial records so
that:
true and fair financial statements
of the company can be prepared if needed
financial statements can be
conveniently and properly audited if necessary, and
the company can obey the tax laws.
If your company is a ‘small proprietary company’
or a small company limited by guarantee (as defined in the Corporations Act),
it will generally not have to prepare formal financial reports under that Act
each year and lodge them with ASIC. However, you must still keep financial
records, and may need financial reports for managing and monitoring your company’s
financial position and performance for tax purposes or for raising finance.
What are financial records?
Some of the basic financial
records that the law may require a company to keep are:
general
ledger, recording all the company’s transactions and balances (e.g. revenue,
expenses, assets, liabilities) or summarising transactions and balances
detailed in other records
cash
records (e.g. bank statements, deposit books, cheque butts, petty cash records)
debtor
and sales records (e.g. a list of debtors and their balances, delivery dockets,
invoices and statements issued, a list of all sales transactions)
creditor
and purchases records (e.g. purchase orders, invoices and statements received
and paid, unpaid invoices, a list of all purchases, a list of all creditors and
their balances)
wage and
superannuation records
a
register of property, plant and equipment showing transactions and balances in
relation to individual items
inventory
records
investment
records (e.g. contract notes, dividend or interest notices, certificates)
tax
returns and calculations (e.g. income tax, group tax, fringe benefits tax and
GST returns and statements), and
deeds,
contracts and agreements.
A company would also normally prepare the
following statements regularly (e.g. monthly) to manage its business
performance and provide to lenders:
Statement
of Comprehensive Income:a statement showing the company’s revenue and expenses and
the profit or loss that results from these items
Statement
of Financial Position: a statement showing
the things of value the company owns and the debts the company owes, and
Statement
of Cash Flows: a statement summarising
cash inflows and outflows.
JH Business Services & Taxation Accounting | Business Advisory | Tax Services Specialist in small to medium business & personal tax services
Norwest Office
Suite 205 29-31 Lexington Drive Bella Vista NSW 2153