How good are your business records?

The law states that you must keep all the records and documents needed to complete and submit your tax return. The same applies for preparing accounts for a business and there are penalties for failing to do either. How long you should keep records for depends on what they are. My advice is to keep everything for at least six years. However, employers only need to keep PAYE records for three years, CIS records for three years and records to complete a personal (non-business) tax return for 22 months.

All businesses need to keep the following records. For sales and takings including cash receipts - till rolls, sales invoices, bank statements and paying in slips. For purchases and expenses including cash purchases - receipts, purchase invoices, bank and credit card statements, cheque book stubs, motoring expenses and mileage records. Also, all businesses must keep accounting records and there are additional specific records that need to be kept for other areas of your affairs.

For example...

If your business is VAT registered you will need to maintain a VAT Control account and keep all sales and purchase invoices and import and export documentation. If you operate a Margin scheme, keep all records that specifically relate to any purchases and sales under that scheme. If you operate a Retail scheme, keep all records that support your calculations.
Employers

If you employ people you need to keep records of all payments to your employees, deductions of income tax, national insurance, student loan payments, details of employee benefits and expenses and records of statutory payments including sick pay and maternity pay. The liability to keep these PAYE records is still yours even if you use a payroll bureau.

Whether your property ownership is residential, commercial, holiday-let, UK or overseas, you need to keep all records relating to rental income, allowable expenses and capital costs. Allowable expenses include agent, accountant and legal fees, buildings and contents insurance, loan interest, utility bills, rent, council tax, advertising and other direct costs.

Don't give HMRC an excuse to question your figures and always, always, always keep your business and personal records separate. Good record keeping is at the heart of good business and it's not just the statutory issues that are important. A well-recorded business will be a better-run business which in turn will make for bigger profits.

Original Article :
http://www.accountants-brighton.com/blog/post/2011/11/06/How-good-are-your-business-records.aspx

Read our accountancy blog with more accounting tips and tricks
www.accountants-brighton.com/blog