Most business owners know that they should be keeping records; many err on the side of caution and simply keep everything; every receipt, every piece of paper, every ticket. This is completely understandable, everyone knows that HMRC will need it eventually and even if they don't the accountant surely must, but how sensible is it really to hoard every piece of confetti associated with your business and is it really necessary?
In truth good record keeping is absolutely vital for all businesses, but this does not mean that it is crucial to fill every space you have with paper; understanding exactly what you need to save and how long you are obliged by law to keep it for can be confusing, but the answer is not simply to squirrel everything away.
Storage space and collating time obviously have to play a part in the story, because realistically, neither the Revenue nor the accounting profession expect you to spend your entire working life filing everything into boxes; there are however some things that absolutely must be recorded kept safe.
In the plainest of terms you should be carefully recording, preferably using a good accountancy software package or even simply an Excel spreadsheet, all financial transactions of the business, including all income, regardless of source, all out goings & expenses and records of all staff, however fleeting. All financial and staff records must be kept for a minimum of six years.
There are of course important reasons why you need to be keeping these careful records; your income and expenditure needs to be recorded for tax purposes, not simply to ensure that you pay enough, but also to prevent you having to pay too much and because HMRC can request these records even years after you have paid your taxes, it is vital that they are kept safely.
It is not just Her Majesty's Government that may require your business' financial records to be in tip top condition; if at some point, as most businesses do, you require funding from outside sources, be it from a high street lender or a private investor, they will doubtless require accurate financial records going back a number of years. Other financial organizations such as insurance companies will also often need some financial history before agreeing to provide insurance for your firm and so being able to produce these quickly will benefit the smooth running of your business.
If at some stage in the future you wish to sell your business, having the right financial records will allow it to be valued correctly and ensure that you receive a fair price.
The most important thing to remember about record keeping for your business, is that it is more about quality than quantity; your accountant and/or The Revenue will not be impressed by a store room crammed to the hinges with files, what they need is simply, accurate and thorough records kept using a simple system. Keep the records clean and intelligible and easy to access and if in any doubt as to what you should be recording speak to your accountant and ask them to run through what is needed in layman's terms. Bookkeeping for your business should not be a complicated affair, so don't over-bake it. Keep your records clear, complete and for a minimum of six years. Good Luck.
No comments:
Post a Comment