As the reporting and accounting requirements for a limited company are more complex than those for a sole trader or partnership, the business records will also have to be more detailed. HMRC requires accounts and yearly returns, while firms have to file annual accounts and returns with Companies House. To ensure that the correct amount of Corporation Tax is paid, accurate and detailed records are required, in accordance with the Companies Act 2006.
Financial records
A number of financial records must be kept so that liability to Corporation Tax can be calculated accurately, accounts can be prepared, and Company Tax Returns for every accounting period can be made. Details of income and expenditure of the company should be kept, so that you have accurate financial data. Any assets owned by the company have to be recorded. All debts that are owed either to the company or which the company owes also need to be recorded.
As the end of the financial year approaches, record how much stock is on hand. If you bought or sold any goods during the year, keep a record of who they were bought from and sold to.
All monies spent and received by the company must be recorded, including any petty cash and all invoices. Till rolls, sales books, bank statements, invoices and contracts must all be retained, so that the information can be used at the year end to produce accurate data. As this is time consuming and complex, it is often preferable to outsource to a finance and accounting service.
Company records
You must also retain information about the company in order to remain compliant with Companies House and HMRC. Records must be kept at the registered office of the company. If they are kept somewhere else, Companies House must be notified.
The details of all directors, company secretaries and shareholders must be kept. If the company has pledged to repay a loan at a specific future date, the details have to be kept, along with details of who the loan must be paid to. Any shares bought or sold must be recorded, along with all details of mortgages or loan secured against assets belonging to the company.
How long must you retain records?
Records for a limited company have to be retained for a minimum of six years. There are instances when records must be kept for a longer period, including when something has been purchased that will last for more than six years.
For more information about record keeping, contact us today.