In business it has always been vital to maintain accurate business records. Accuracy is crucial in avoiding penalties by HM Revenue and Customs. You may be charged if you fail to keep records for the required amount of time, or if the record are inadequate. These charges also apply when submitting self-assessment tax returns. Follow our guidelines below to keep your business records accurate!
What records need to be kept?
Depending on the type of business you have and the tax which you pay will determine which records you will need to keep. Some examples include; income tax, Capital Gains tax, Corporation tax and Construction Industry Scheme tax. If you are also a company director and has to complete a self-assessment tax return, you will need to retain evidence of employment income any expenses which you are claiming, employment benefits, pensions, and interest and investment. Records must also be retained for one year following the deadline of January 31 for an online tax return.
Records needed for Self-employed
If you are self-employed you must keep records of all sales and income, along with evidence of expenses and purchases. This evidence may include receipts, invoices, mileage receipts and records of hire purchases. Evidence of all income and expenditure must be retained for five years following the deadline for submission of your tax return. If HMRC informs you that they are going to check your business records, you are required to retain all records until informed otherwise.
Business records for a limited company may be slightly more complex and may require the services of an accountant in order to ensure accuracy and the completion of necessary documentation. Invoices, bank statements, sales books, ledgers, petty cash records and any other documentation which will outline income and expenditure of the company should all be retained for six years following the end of the accounting period.
If you are a business that operates a PAYE scheme, you will need to retain records for the last year years, as well as the current year. Payrolling records will indicate whether your employers are paying the correct amount of tax and National Insurance Contributions. The records will also whether you are in compliance with legislations for statuary pay and national minimum wage.
All business records should be retained for the minimum amount of time so that you remain compliant with the legislation. In order to ensure that you are paying the correct amount of tax you will use the business records to complete annual accounts and a tax return each year.
Use Pandle to keep your records accurate
We have designed the Pandle bookkeeping software with small businesses in mind. Pandle is not only easy to use it has all the functions required to keep your business records accurate and manageable. Sign up now and give it a try, the first 6 months are totally free!