HM Revenues and Customs and BusinessLink have released two tools to help small businesses develop record checking systems and to understand which records the law stipulates that they need to keep.
Companies are obliged to keep invoices and receipts to show what they have bought or sold relating to their business and clear distinctions need to be made between what the business owner has spent personally and what has been spent on the business. When employing others, records of wages and the tax and National Insurance deducted and paid to HMRC must also be obtained.
Where cash is used, till receipts and a record book must be retained to keep track of it all and where a home is used as a base for business then copies of utility bills must also be kept.
BusinessLink has created an online record checker which business both new and already established to keep check of exactly what documentation they need to keep. In addition HRMC has produced a basic fact sheet on record-keeping that covers self employment, contracting in the construction industry scheme, partnerships, VAT, employers and limited companies.
A HRMC spokesperson said: “Whether you work for yourself or you run a small business employing others, good record-keeping has a number of benefits. For starters, if your records are up-to-date, it makes filling in your tax return easier and could help you avoid paying too much tax. Keeping track of your income and expenses will also help you budget for any tax you owe. And it can also help reduce your accountant’s fees, if you use one, as well-organised information saves them time too.
“Up-to-date records also give you the information you need to manage your business and help it grow. They will make it easier to get a loan, if you need one, and may support your claim to some tax reliefs or capital allowances.”
The record checker is available at www.businesslink.gov.uk/recordkeepingcheck while the factsheet is available at www.hmrc.gov.uk/sa/rk-bk1.pdf.
