Record Keeping: What you need to know

You've just incorporated a limited company and you're keen to set everything up and start your business. But as you're likely to be aware, there are certain documents you need to keep to satisfy HMRC, Companies House, HSE and others. The worst part - if you don't keep these records, you could receive a fine.

We've run through what you should be keeping and how it should be kept to try and help you keep your head above the water.

Company Records

If this is your first business, you may be anxious to get the ball rolling and skip some of the important and key parts of running a business. To ensure you're on the right track, you need to keep details of various aspects of the company. These include details of:

  • shareholders, directors and company secretaries (if applicable)
  • the results of any votes and resolutions from shareholders
  • promises for the company to repay loans at a specific date, and who they must be paid to
  • transactions relating to someone buying shares in the company
  • details of any loans or mortgages secured against the company's assets

Keeping your records safe ensures you have them ready should you ever need them. If you're concerned about losing them, use a secure digital service such as Dropbox or Google Drive and keep a digital copy in the cloud too.

Financial Records

As you may have guessed, HMRC are interested in your business financial records, especially when it comes to you paying tax. For a limited company, you need to keep the following records:

  • all money spent and received by the company
  • details of the assets owned by the company
  • debts the company owes or is owed
  • stock the company owns at the end of a financial year
  • any stocktakings you used to work out the stock figure
  • all goods bought and sold
    • who you bought and sold them to and from - with the exception of retail businesses
  • and any other financial records or information you need to prepare and file your annual accounts and Company Tax Return, including:
    • any money spent by the company (petty cash books, order forms, receipts, delivery notes etc.)
    • any money received by the company (sales records, invoices, contracts, till rolls etc.)
    • any other relevant documents such as bank statements and correspondence

If you're a VAT registered business, you also need to keep track of VAT sales and purchase invoices, including the VAT spent or received on each. You also need to keep a record of any import and export documentation.

What if I'm an employer?

If you're an employer, this adds a little bit more to your workload as you have to keep records on employees and their payments too:

  • records of payments made to employees
  • deductions from their wages for National Insurance Contributions (NICs), Income Tax and Student Loan payments
  • details of employee benefits and expenses
  • all records of statutory payments

Register of People with Significant Control (PSC's)

Your PSC register should contain the following information in relation to people within your company. Anyone who:

  • has more than 25% shares or voting rights in your company
  • can appoint or remove a majority of directors
  • can influence or control your company or trust

You still need to keep a record even if there are no people that fit this criteria

How long should these records be kept?

You must keep records for 6 years from the end of the last company financial year they relate to, or longer if:

  • they show a transaction that covers more than one of the company's accounting periods
  • the company has bought something that it expects to last more than 6 years, like equipment or machinery
  • you sent your Company Tax Return late
  • HMRC has started a compliance check into your Company Tax Return

Thats a lot of record keeping!

Keeping records of everything can be a bit of a headache, so there are a few things you could do to help make it easier.

  • Use accounting software - this will help you issue invoices, keep track of purchases, and help you maintain accurate financial records
  • Use payroll software - you should be doing this already for Real Time Information (RTI) submissions, but they can help keep records of payslips and employee details
  • Hire an accountant - an accountant would be able to help with submissions and possibly payroll, relieving you of some of the work
  • Keep digital records - using secure online storage such as Google Drive, Dropbox, OneDrive (or any of the others available), you can organise your documents easier and better. However, it has to meet the requirements set by HMRC. Not all documents can be digitised, some have to be kept in their original format.

Want more information?

For more information on record keeping, check out the GOV UK web site.

All information correct at the time of writing - March 2019

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