Welcome to the fifth blog in our start up series, this week on the importance of maintaining business records. To read earlier blogs in the series click here.
As a business owner you are required to keep various records relating to the activities of the business. It can be daunting to know what business records you need to retain and how long you should keep them. The HMRC requirements relating to business records differ depending on whether you are a sole trader or a limited company, and whether or not you are VAT registered. Depending on your business activity and sector there may be other records you are required to keep up to date. You may also be required to comply with data protection regulations (set out in the General Data Protection Regulations (GDPR)) regarding how you handle and store personal data.
The type of basic records you should retain as a small business owner include; sales and purchase invoices, details of other business income and business expenses, bank statements, mileage records and details of any capital asset purchases and related loan or leasing arrangements. If you have employees you are also required to retain HR and payroll records. VAT registered businesses need to keep supporting evidence to support figures recorded in their VAT return including VAT receipts for all expenses on which input tax has been claimed. Other records that a business should retain include details of insurances, licences and lease agreements. We are always happy to run through this in more detail with new business owners and clients.
Some smaller businesses may not keep accounting records, or may engage an accountant to prepare them. Most businesses keep accounting records which may be manual, on spreadsheet or electronic using an accounting software application. With the advent of Making Tax Digital the emphasis is very much on all businesses keeping reliable records in a digital form. There are many advantages to a system of this kind and would be pleased to assist you with this. Contact Us
If you are self-employed, and obliged to submit a self-assessment tax return, you must keep your tax records for at least five years after the 31 January submission deadline of the relevant tax year. For example, if you submit your 2018-19 tax return online on or before 31 January 2020, you must keep your records until at least the end of January 2025. Records for this purpose include those relating to personal income etc. If you send your tax return more than four years after the deadline, you will need to keep your records for fifteen months after you submit your tax return.
If you keep your tax records on a computer, make sure you have sufficient backups of your data to meet these requirements. If you change software during the record retention period, you may need to print relevant reports if you are unable to maintain access to data backups.
If you run your business as a limited company you must keep records for six years from the end of the last company financial year they relate to, or longer if:
If you are not in business, the minimum period is 22 months after the 31 January filing deadline for that tax year and at least 15 months after filing if the return was filed late.
The new data protection regulations require that you don’t keep the personal data of your customers, staff or other contacts when they are no longer required. It applies to all personal data and you are required to have a lawful basis for processing data and are able to document it – keeping data ‘just in case’ is not enough of a reason. Reasons for processing and storing data can include having the person’s consent, a contract or having a legal obligation to hold it.
Keeping personal data electronically or in dusty boxes indefinitely is no longer an option – you potentially risk heavy fines if you do. Many electronic document management systems now have a filter process that will help you manage this search and destroy requirement. As for the storage boxes, you will have to resort to a more hands on approach.
DNG offer a full range of services to new start up, and established businesses in the Northampton and Daventry areas. For more information on the services we provide click here and contact us today to discuss what we can do for you!
Over the past few weeks we have published a number of blogs focussed on start up businesses. These include blogs on topics such as; writing a business plan, how to decide on what business structure is best for you, the benefits of engaging an accountant and more. To read the earlier blogs in the series click here. Next weeks blog will all about tax small businesses are required to pay. Keep visiting our blog pages and social media pages for essential business news and information.
"I can't praise DNG and Katie enough, I was already convinced I wanted to go ahead with the QuickBooks set up so on the initial visit Katie just gave me a tour of the site and showed me exactly what to expect. Katie gave me confidence, allowed me to have a 'play' with the programme while she was with me giving hints and tips. I felt totally at ease with Katie almost immediately and I have had occasion to email a couple of queries and have found the response timely and very helpful. I would definitely recommend DNG and QuickBooks."
"With the help and advice from DNG I have now had Xero installed for my accounting purposes. Although this was a worrying prospect for me I have to say that Xero is very straight forward and easy to negotiate. Everything was set up and geared for our purposes and has been a very positive experience. In the event that you require help the explanations and instructions on the help bar are brilliant and written in layman’s terms.
I don’t think I would have progressed so well without the help and support of Jo and Sarah from DNG. They put everything in place and guided me through all the procedures and gave me confidence. So much so that within two months I had ditched my manual accounting books and am doing everything on Xero. Its great to always have someone to ask even this silliest of questions at the end of the phone or emails! Thank you Jo and Sarah!"
"I have had nothing but a positive experience over the past 5 years from DNG. This tax year they have been particularly fantastic at saving me a considerable amount of money and advising on future payments. Their fees are probably the best money I spend every year. I’ve been asked for their details from 2 friends and family as a result. I would thoroughly recommend them as not only do they get good results, they are very easy to work with."
"We have been very impressed with the service we have received from DNG since outsourcing our payroll at the start of 2017. Our payroll/auto enrolment is not straightforward. Not only do DNG deal with the pension complications effectively and efficiently each month, they also identified errors we made in earlier years enabling us to recover nearly £4,000 of overpaid National Insurance contributions. We are pleased to recommend DNG, and their payroll team in particular, for their professional and diligent approach to providing their services to us."
"DNG provided us with invaluable advice and support as we negotiated our way through a recent MBO. They were super responsive and patient with our never ending questions and queries. I wouldn’t hesitate to recommend their services to other small businesses."
"Halcyon has been with DNG since 2000. In that time they have become an integral part of our business success. Not only do they provide the statutory auditing services but they have become our "Critical Friend" - offering advice and guidance at crucial stages of the Company's evolution and development. It's hard to imagine not having them there.
We are delighted with the quality of service they provide - always professional, always timely and always valued.”
"Jones Wholesale have been clients of DNG’s payroll facility for many years and would not think of changing to any other option. The consistency of service received is extremely reassuring and the staff I have experienced have always been efficient and a pleasure to deal with.
To know that calculations and reports will always be accurate and timely is of paramount importance to me and their knowledge and advice on personnel and tax/benefit matters has proved particularly valuable."
"The British Institute of Non-Destructive Testing (BINDT) has used DNG’s services for over 25 years. DNG are active participants in the day-to-day function of the Institute’s Finance and Accounts department.
BINDT is reassured in the knowledge that the staff at DNG are always on-hand with viable solutions and dependable advice for any financial query passed their way.
DNG provide outstanding payroll and budgeting support to BINDT and are consistent in preparing for and providing a thorough audit of the Institute accounts.
The support and services BINDT receives from DNG are second-to-none."
"iSAMS have been working with DNG since 2008 and they were not only chosen on the basis of their excellent reputation locally but also on their expertise in our particular area of activity.
DNG are our ideal partners and have helped us maximise on the exciting growth our business has seen during its infancy. We particularly value the on-site and personal service provided by the Management Accounting and Systems Support team.
We are more than delighted with the services that they provide and would strongly recommend DNG to any company or individuals seeking very professional and friendly advice."
"Barton Petroleum Ltd have been using DNG’s payroll services for many years now and value highly the confidential and personal service which they deliver. Their speedy and efficient resolution of complex queries is particularly appreciated.
DNG represent excellent value for money at a time when all forms of expenses are under the microscope and I would have no hesitation in recommending them as an outsourced bureau."
"DNG’s approach and conscientious attitude have been invaluable to my business and I could not have done without their expertise. Knowing the payroll for my employees, at the Tattoo Club is in safe hands has allowed me to concentrate on other issues within my business.
I pass on my sincere thanks to them and hope that we will continue our business association well into the future."