It does not matter whether you are self employed, a partnership or trading through a Limited Company, it is a legal requirement to keep accounting records and store them for a minimum of six years after the end of the last accounting period to which they relate. As a minimum the accounting records should include:
- all money received and spent by the company
- details of assets owned by the company
- debts the company owes or is owed
- stock the company owns at the end of the financial year
- the stocktakings you used to work out the stock figure
- all goods bought and sold
- who you bought and sold them to and from (unless you run a retail business)
What’s important is that you keep accurate, relevant financial records and update them on a regular basis. You may have to pay a penalty if you’re unable to back up the statements made in your income tax or VAT (if it applies to your business) returns.
It is easy to forget to complete accounting tasks whilst you are so concerned about meeting sales targets and delivering goods or services on time, but it is important.
The introduction of Making Tax Digital (MTD) means that currently, VAT registered businesses have to keep their accounting records digitally and submit their Returns in a prescribed format to HMRC. Eventually all businesses will have to comply with this legislation however it will be at least 2021 before MTD for Income Tax and Corporation Tax is introduced.
Whilst non VAT registered businesses can still keep their accounting records in a manual ledger, spreadsheet or even a shoe box, there are significant benefits to switching to a digital solution now such as:
- Gives you the up to date information you need to manage your business and make it grow.
- Enables you to report on your profit or loss easily and quickly when required.
- Helps you or your company avoid paying too much tax.
- Provides back-up for claims for certain allowances.
- Helps you plan and budget for tax payments.
- Reduces the risk of interest or penalties for late tax payment.
The Tax Partnership can advise on a suitable system for your business or, alternatively, our All Inclusive Service will take care of all of your book-keeping and accounting requirements leaving you with time to spend running your business.