We’re all guilty of it at some point – focusing on building up your business and turning a blind eye to your financial affairs.
Most of us nip it in the bud soon enough. If you don’t, you won’t be complying with tax and regulatory requirements set out by HMRC – and that can end in tears.
Up-to-date and accurate financial records show your business’s position at any time, while ticking all of the tax and legal boxes. You can see how having all of this financial information helps you make better informed strategic business decisions.
From planning future tax liabilities to weighing up whether or not to spend any surplus on expanding your business, or to rein in costs where you’re over budget, good records shape your business.
What records to keep
What business records you need to keep depends on your business structure.
Sole traders pay income tax through self-assessment and need to keep records of:
- all sales and income
- business expenses
- PAYE records – if you’re an employer
- VAT records – if you’re registered for VAT
- records about your personal income
You should also keep a record for your 2020/21 tax return if you claimed through the self-employed income support scheme during the coronavirus crisis.
For directors of limited companies, however, it’s slightly different. You pay corporation tax and must must keep details of:
- directors, shareholders and company secretaries
- results of any shareholder votes and resolutions
- debentures – promises made by the company to repay loans
- indemnities – promises the company makes for payments if something goes wrong and it’s the company’s fault
- transactions of any shares purchased in the company
- loans secured against the company’s assets.
Record-keeping options
At Dunkley’s, we’re big advocates of you using cloud accounting software to keep your business’s financial records up-to-date. Mainly because it’s dead easy to do, regardless of whether yours is a startup or a large company.
Working with the cloud gives you a real-time overview of your business’s finances, improves collaboration with your team, and saves your company time and money.
The cloud is a platform to make data and software accessible online anytime, anywhere, and from any device meaning you can always stay connected with your data.
We offer three cloud options for clients – QuickBooks Online, Sage Business Cloud, and Xero – all of which provide efficient ways to keep and submit accurate records.
Access to funding
It is vital to have clear, up-to-date records if you want to obtain credit or investment from banks or other lenders.
To secure funding, you must be able to show your income and explain your cashflow and what you pay out.
On top of our cloud software options, we offer a wide range of business advisory services including advising on appropriate funding sources to get your business growing. Get in touch to find out what we can do for your business.