HMRC claims that more than two million small business owners could be keeping inadequate records, which in turn leads to an underassessment and payment of tax. Raising revenue aside, poor record keeping is one of the top reasons why a business fails and so it also benefits small businesses to get their house in order.
So, what business records should you be keeping? To quote HMRC guidance "You must keep records of all your business transactions."
This will vary depending on the type of small business you are running, if it has employees and also whether it is VAT registered. While there are a number of online resources available to support small businesses on the specific types of records it should keep, a quick check list should include:
When it comes to keeping on top of your finances - don't put it off. It's important to set aside dedicated time each week to review and update your books. While jotting things on paper may work for some people, it is not the most effective way to work.
Of course, an easy way to get organised is with financial management software. It will help understand how your business is doing and ensure you have everything to hand, should HMRC pay a visit.
Find out more about compliance checks. Watch the video below: