If you are new to running your own business, you’ve surely noticed that, aside of providing your products or services to your clients, there are many tasks to keep up with, from admin to accounting.
In order to never fall behind, and be compliant with the new MTD rules (link to MTD blog), it is of vital importance to keep your documents and records up-to-date.
Accounting and business records are documents such as:
- Bank Statements
- Invoices/credit notes
- Legal Documents
Keeping your records up to date is an important part of running a business, and of crucial importance for a series of tasks, such as:
- Filling in your tax returns easier and efficiently
- Helping to identify whether your business should be pay VAT to HMRC
- Saving a large amount of time when preparing your accounts at year-end
- You will be able to plan and meet financial commitments like salary payments and paying creditors
- Manage all the expenses you claim and help you to pay the right amount of tax
- Help to plan your tax payments correctly, avoiding overpayment or underpayment
- Being able to monitor the progress of your business, to show where changes need to be made
If you want to keep your own business records, there a few easy steps you can start from:
- Get set up on an accounting software system – this will help you to keep good tax records, but bear in mind your final tax returns each year is a product of your recordkeeping abilities
- Start to do a monthly summary of your expenses along with receipts and cross check with your daily records, to make sure you aren’t missing any out
- Keep track of your employees payroll and tax deductions
- Keep records for as long as required by the law, this can help if HMRC request to see past records.
- Keep all documents that contain details such as; payments, receipts, sales, credits, liabilities and assets. If you do not have a receipt, then you need to make a detailed note for your records.
The trick is to do this daily or weekly, in a manageable way, and not let the workload pile up, this way you will always be able to present records to HMRC if needed and keep yourself informed about your tax and income.
For more information about HMRC-approved and MTD compliant accounting software, please see the relevant HMRC page.