Hilary's top tips: Record keeping
Keeping good records might not be the most exciting aspect of running a business but, when it comes to growing your business, it is one of the most important.
Hilary Devey has visited struggling businesses throughout the country, and seen how improving their business systems, such as keeping good records, managing cashflow and developing a marketing strategy, can help turn around their fortunes.
Hilary's top tips for keeping good records
Keeping good records makes good business sense as it gives you the information you need to manage your business and help it grow. In addition, it makes filling in your tax return easier and quicker and helps you avoid paying too much tax.
Good record-keeping is also a legal requirement. In April 2009, penalties were introduced for not taking reasonable care with records and tax returns.
Here are six tips for good record-keeping:
1. Set up a reliable system for keeping full and accurate records of your income and expenses from the outset.
2. Keep records throughout the year - update your records regularly, rather than letting the paperwork pile up.
3. Keep your records for a minimum of six years.
4. Keep records to show what you have bought or sold relating to your business. This should include details of all cash transactions as well as invoices and receipts.
5. If you are an employer you must keep records of wages paid and details of tax and National Insurance that you have deducted and paid to HMRC.
6. Keep bank statements and building society books - this is particularly important if you don't have a separate business account. You should be able to show clearly what you have spent personally and on the business.
Stephen Banyard, Business Customer Unit Director at HMRC agrees with Hilary, saying:
"Failure to take reasonable care costs the Exchequer over £6bn a year with poor record keeping a major cause. We hope this series will raise awareness of the need for good record keeping.
"We also want businesses to realise the benefits to their business - such as improved cash flow - of taking better care of their records and paperwork."
For more help with record keeping go to www.hmrc.gov.uk/factsheet/record-keeping.pdf
To watch a short online video on record keeping visit www.businesslink/gov.uk/taxhelp
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A brand new troubleshooting series that aims to transform struggling small businesses. Each week, straight-talking, self-made millionaire Hilary Devey will tackle two ailing companies. Can the Business Inspector help keep the dreams of Britain’s entrepreneurs alive?
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