Keeping good records:
• helps to maximise all the expenses you claim and reduce your tax obligations
• will help out, should you be investigated by HMRC
• makes it quicker to prepare your accounts at year-end
• gives you the information you need to run your business and help it grow
• helps you plan for tax payments
• helps identify the strengths and weaknesses in your business
• helps manage changes and improvements in your business
• will help you plan to meet financial commitments such paying creditors or employees
• makes it easier to get a loan or sell your business
• avoids over/under tax payments
• helps identify if your business is liable for paying VAT to HMRC
• makes it easier to distribute profits to shareholders as dividends or for partnerships where both profits and losses have to be shared.
Business records can be maintained manually, computerised on a spreadsheet or kept online. Make sure the system you use is easy to operate, and complements your business. Alternatively keep hold of your receipts, bank statements and invoices and outsource the work.
Keeping business records can be daunting at first. The key is to break things down into a series of straightforward, manageable tasks. Then you can access and update them on a regular basis, rather than letting the paperwork pile up.
Every business must keep records for as long as required by the law. It is important to do so as HMRC may request to see past records if there is any issue regarding your tax. The minimum period for which you must keep records is six years for VAT or five years from the latest date for filing your tax return.
Make sure you keep all documents that contain details of payments, receipts, credit purchases and sales, assets and liabilities. If you’re not able to obtain a receipt for an expense make a note then record the details.
TaggedCorporation Tax , Limited Company , Sole Trader , VAT