Every business needs to keep financial records for as long as required by the law. It is important to do so as HMRC may request to see past records if there is any issue regarding your tax.
The minimum period for which you must keep records is six years for VAT or five years from the latest date for filing your tax return.
However, whether it’s paper receipts, supplier invoices or PayPal emails, your organised financial records are a valuable tool for helping you make the most out of your business.
As well as helping to maximise all the expenses you claim and reducing your tax obligations, good financial record keeping means quicker preparation of year end accounts and this is essential for your business because they:
- help you plan for tax payments
- help you identify strengths and weaknesses in your business
- help you plan to meet financial commitments – paying creditors or staff
- give you information you need to run your business and help it grow
- make it easier to get a loan from potential investors or to sell your business
But as daunting as the task of organising your business paperwork may seem, it’s amazing how breaking things down into small manageable tasks can really help.
For example, in cash heavy businesses, putting all paper receipts into envelopes marked according to the month (e.g. “Jan-19”) before passing to your bookkeeper can make a big difference.
With electronic data, storing emails and receipts in a separate folder on your laptop or on a USB stick or external hard drive once received, read and actioned, can also save you a lot of time.
Keeping any important documentation essential to your business, such as loan agreements or asset purchase contracts, in a folder separate to your day to day paperwork keeps it safe and easily accessible to you, your potential investors and your bookkeeper.
So hopefully with just a little bit of planning and organisation, you can avoid feeling buried under a mountain of paperwork and focus on what’s important – running your business.
Still having issues? Give us a call, the Smarties bookkeeping team are here to help.