All businesses must maintain complete and accurate records of their activities and the minimum requirements depend on the type of business you operate.
Records are essential to support tax returns, their calculations and year end accounts preparation. Records normally maintained by a business will include:
- A sales ledger (a record of the money you are owed)
- A purchase ledger (a record of the money you owe)
- A cash book (bank transactions, expense receipts, personal and tax payments)
- A petty cash book (for any cash that you draw from your company bank accounts)
- Fixed asset register (such as office equipment, patents and trademarks)
- A mileage log of all journeys (for business purposes)
inniAccounts online accounting software takes care of your record keeping logs seamlessly behind the scenes.
Sales Ledger – This is a log of all invoices that you have sent to clients along with details of whether the invoice has been paid. The sales ledger typically contains:
- the invoice date, reference number and client
- dates recording when payments have been chased
- details of the amount paid and whether any amounts are outstanding
Purchase Ledger – This is a log of money you owe to other companies, such as business related bank loans or credit card bills. The purchase ledger typically contains:
- Invoice number
- Amount owed
- Amount paid
- Cheque or transactions reference number
- Date due and date paid
Cash book – The cash book is a record of all your company’s income and expenditure. It allows you to cross check your transactions against your bank statements and spot any errors or outstanding payments promptly. The cash book typically contains:
- Invoices paid (date and amount)
- Cheques paid (number, amount and date)
- Details of transactions such as interest and bank charges
- Online payments ie. tax payments (amount and date)
- Any other regular payments such as bank loans
Petty cash book – This is a record of all your miscellaneous expenditure, for example stationery and postage. It is not normally required for contractors as it is rarely withdrawn from the business account.
Fixed Asset register – This is a log of all assets that are held for the purpose of production of goods or rendering of services, and not held for the purpose of sale in the ordinary course of business. The fixed asset register typically includes:
- Description of asset
- Date purchased & amount paid
Mileage Log – The mileage log typically includes:
- The date of the journey
- Details of from where and to the journey was made
- The number of miles
- The purpose of the journey and who was visited
Supporting records may include a time sheet register and a project time / cost ledger for fixed price contracts.
What original documents do I need to retain as hard copies?
HMRC and Companies House are moving towards electronic filing. This is also reflected in the requirements for company records.
Overall most records are acceptable in electronic form, provided they are legible and accessible. There are a few records however where the originals must be retained. The simple rule to apply is if it is a signed document, keep the original safe. Examples include:
- The first minutes when the company is formed
- Share certificates
- Dividend vouchers and minutes
- Any other official company documentation
It is also worth while retaining the originals of any other signed documents such as lease agreements and contracts.
Do all companies have to keep accounting records?
Yes, all limited companies whether trading or not must keep accounting records, normally for at least 6 years.