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Build a better business – Keep proper financial records


Ignore this at you peril.

In many cases it is a legal requirement to keep adequate accounting records and you could find yourself on the end of a hefty fine from HMRC if you don’t. The vast majority of businesses that fail didn’t keep proper financial records. Equally important is a business owners’ ability to understand what is going on in his business.

Every business registered for VAT is required to maintain financial records according to the guidelines given by HMRC. Similarly, it is a requirement of the Companies Act that every company should keep proper accounting records of money received and paid, of all sales and purchases, and of assets and liabilities.

HMRC requires every business which employs staff to keep proper records for Pay As You Earn (PAYE) and for the calculation of tax liabilities. All employers’ payrolls are linked to HMRC using Real Time Information. In some types of business, there are additional records that have to be kept to satisfy government requirements.

If you think this is unimportant then:

You have no reliable information to assist you with your everyday business decisions;

You pay unnecessary fees to your accountant;

You cannot supply information to your bank, mortgage lender etc. and so get financial help
when you need it

DON’T RISK YOUR BUSINESS

The steps to take are:

Set up a system: Establish a system to record financial transactions accurately and consistently. This can be done manually, using accounting software, or a combination of both.

Use a chart of accounts: A chart of accounts is a list of all the accounts used to classify transactions. It helps to keep track of various types of transactions, such as revenue, expenses, assets, liabilities, and equity.

Record all transactions: Record all financial transactions in a timely and accurate manner. This includes sales, purchases, payments, receipts, and expenses.

Reconcile accounts regularly: Reconcile bank accounts, credit card statements, and other financial accounts regularly to ensure that all transactions are recorded accurately.

Maintain supporting documentation: Keep all supporting documents such as invoices, receipts, and bank statements organized and easily accessible. This will help you to verify transactions and ensure that they are recorded correctly.

Use accounting software: Consider using accounting software to simplify the accounting process and automate some tasks, such as invoicing and financial reporting.

Seek professional help: If you are unsure about how to keep proper accounting records, seek professional help from an accountant or bookkeeper.

Disclaimer:

Paul Stankiewicz is the owner and principal at Paul Marks & Co Chartered Accountants which is the trading name of Paul Marks Ltd a Limited Company registered in England and Wales (registered number 4487645).This article is designed for the information of readers only and is the opinion of the author only. Readers should not act on any of the information contained in this article without seeking professional advice. Nothing in this article constitutes advice, nor does the transmission, downloading or sending of any information or the Material create any contractual relationship. Links to third party websites are provided as a convenience to the reader, Paul Marks Ltd does not control and is not responsible for any of those websites or their content. Paul Stankiewicz and Paul Marks Ltd accepts no liability or responsibility whatsoever for any loss or damage suffered by any user of the information contained on or accessed through this article or the Material downloaded.