Step-by-step plan: How to keep business records
By keeping good business records you know the financial position of your company. And if you meet the hours criterion. This is necessary if you want to take advantage of tax benefits. You can do the administration yourself or outsource it. Read the 5 steps that will help you to keep your business records.
All your company details, both on paper and digital, are part of your business records. Examples are:
- cash administration (including draft notes) and receipts
- financial notes, such as the purchase and sales ledger
- interim check calculations
- invoices received and copies of invoices you have sent. Always check that invoices meet the requirements.
- bank statements
- contracts, agreements, and other deals
- agendas and other appointment books
- correspondence, such as letters and emails
- software and data files
You cannot view this video due to your cookie settings. Would you like to watch?or Watch this video on YouTubeHow cookies are used on Business.gov.nl.Consider a business bank account
You do not have to open a business bank account, but it is useful. It allows you to keep your private and business expenses and income separate. And that is important for a clear business administration.
You are legally required to keep your administration for 7 years. You can make agreements with the Netherlands Tax Administration (Belastingdienst) about shorter terms.
You have to keep these documents for 7 years:
- debtor and creditor administration: unpaid invoices of clients and suppliers
- administration of purchases and sales: all invoices of purchases and sales
- general ledger administration: all financial transactions such as received payments
- inventory administration: your entire inventory and its value (if you purchase and sell goods)
- cash administration: all receipts for products that you have bought or sold with cash
What are debtors and creditors?
You receive money from debtors and pay money to creditors. Debtors are your customers, creditors are your suppliers. You keep records of both. For every amount debited or credited to your account, you must keep the corresponding receipt or invoice.
You must keep data on real estate and rights on real estate for 10 years. Examples of real estate are business premises, storage facilities, and land. Do you sell your goods or services inside the EU to clients who do not file VAT return? And have you chosen for the One Stop Shop (in Dutch)? Then the term is 10 years as well.
You agree with the Tax Administration on how to keep your administration, digitally or on paper. And in how much detail (for example daily transaction lists, counting strips of the cash register). The Tax Administration documents these agreements in writing.
You can also keep your records through online accounting software. This animation shows the options and benefits of online accounting software:
You cannot view this video due to your cookie settings. Would you like to watch?or Watch this video on YouTubeHow cookies are used on Business.gov.nl.Follow privacy regulations (GDPR)
Your records also include personal data, for example on invoices. This means you must comply with the General Data Protection Regulation (GDPR or Algemene Verordening Gegevensbescherming, AVG), the European privacy law. If you want to keep personal data longer than the mandatory retention period of 7 or 10 years, you must have a good reason to do so. Do you no loger need the data? Then you must destroy it, or make it anonymous. Read more about retaining and destroying personal data.
You do not have to keep a record of your hours. But if you want to make use of the private business ownership allowance (zelfstandigaftrek), or the tax relief for new companies scheme (startersaftrek), you need to show the Tax Administration that you comply with the hours criterion:
- You work in your business for at least 1,225 hours per calendar year. This also applies if you start or end the company during the year. Or if you are a part-time entrepreneur.
- You spend more time on your business than to other work. For example, when you are also employed. Did you not have a business for 1 or more years during the past 5 years? Then this criterion does not apply.
Good start with Tax Administration
The ‘Goede start belastingdienst’ website (in Dutch, but some English information is available) tells you how to file returns and gives information on other tax-related matters. You also get tips on how to structure your records. And you get information about fiscal matters for starters. The live chat allows you to ask an expert live questions, in English.
You can do the administration yourself or outsource it to a bookkeeper or accountant.
Difference between an accountant and bookkeeper
A registered accountant:
- usually works for larger companies, but also for SMEs and self-employed professionals (zzp’ers).
- must take out liability insurance and is subject to disciplinary law. An accountant
- must also meet training requirements and delivery and payment terms apply.
You are legally required to hire an accountant if 2 of these 3 criteria apply across 2 consecutive financial years:
- if you have more than 50 employees
- a turnover of €15 million
- more than €7.5 million as your balance sheet total
Smaller SMEs and self-employed professionals often opt for a bookkeeper (boekhouder).
A bookkeeper:
- is not required to take out liability insurance
- decides for themselves whether they will only assist with business administration or also provide advice