All businesses need to keep records of their financial transactions for several practical reasons:
- You need to know how well you are doing, whether you are making or losing money, what money you have in hand, and what money is owed to you and by you. If you keep up-to-date records yourself, you will have a reasonable idea of your company’s financial health.
- You need to show the taxman, bank manager and any investors how things stand within the company.
- You are required by law to keep to all the documents - bills and receipts - which form the basis of information on your tax return for six years.
- You need to know your turnover, precisely. For instance, if you turnover more than a certain amount in any twelve-month period, you are obliged by law to register for VAT purposes within 30 days of crossing this threshold. Failure to comply can result in heavy penalties. After registration, you need to keep accurate records for the VAT man. Click here this year’s thresholds.
There are several book-keeping packages on the market that BMG is familiar with. In-House we use Sage where appropriate. For some clients we use a simple spreadsheet or you can literally keep ‘books’ (physical records, where you write down the money flowing in and out of your business under different headings.
