In the UK, HMRC is launching a crack down on poor record keeping by small and medium sized entreprises in 2011. Businesses could be fined as much as £3000 for poor record keeping. Yes £3000!
If you know, you’ve been a bit slack about your business records then start 2011 with a clean slate and get your business records in order. I know administration is a chore but maintaining a simple filing system or spreadsheet is all it takes.
Why do you have to keep records? Record keeping is the tax man’s way of verifying what you claim to earn or spend. It is a requirement by law to keep good accounting records hence the hefty fine.
Record keeping is simple:
- Set up an easy to use system that can be easily followed by anyone. It can be as simple as logging all transactions in one note book or spreadsheet.
- Update this list on a weekly or monthly basis. Record keeping becomes a nightmare when you only review it at the end of the year.
- Archive records at the end of the year because you MUST keep your records for a minimum or five years from your latest filing date.
My policy on record keep is this – if in doubt, keep it! It’s better to have too much information for the tax man than gaps in your records.
I hope you find this tip useful as you plan for 2011.
Griselda
Your small business consultant – helping you improve your bottom line
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