The Importance of Records
Up to date financial and accounting records are important on so many levels. The life line of any business is cash. In its various forms, ‘cash’ is still ‘king’. A regularly reconciled bank account will help you plan and manage the ‘life blood’ of your business. Many small businesses fail because of poor cash management, they move a great product or service, but if cash is not collected and suppliers paid in good time, difficulties may arise.
Keeping good records as transactions happen will help resolve issues down the ‘road’, whether these questions are from suppliers, customers or government agencies such as HMRC.
Up to date records means accounts and tax returns can be prepared in good time for filing with HMRC / Companies House / Charities Commission etc to avoid filing penalties. Knowing what your tax liability is in good time allows you to put the money aside instead of playing a ‘catch up’ game with your cash.
If you are a limited company the law requires the directors to keep full accounting records.
Keeping good trading records from the start will enable you to monitor if and when you need to become VAT registered.
If you are unfortunate to be involved in an HMRC enquiry, good records will make the process easier and shorter.