Over the years that we have been open as Liverpool accountants we have helped many people start their own company. When you establish a limited company, your own personal finances are kept completely separate to your company’s (unlike becoming a sole trader) although you are still responsible for your limited company’s tax and accounting issues. Many people who own limited companies opt for hiring an accountant, but even if you choose not to hire an accountant, there are still a number of things you need to take care of.
Professional accountants can help with your tax as well as various other money-related tasks and paper work but you yourself need to make sure that you keep hold of records about the company itself as well as financial and accounting records. You will also need to make sure you keep hold of any details regarding company secretaries, directors and shareholders, including any other money related documentation. This could be anything from loans, mortgages, transactions, unpaid declarations, shares, etc.
If you store your records somewhere other than the registered address of your company, you are obligated to inform the Companies House.
As well as your company information, you must also keep any accounting records and these could be anything from money received and spent by the company, asset details, debts to be paid by the company or owed, stock the company owns, stocktaking’s, and information on the people and company’s you have had financial dealings with.
These tie in with what you will need to calculate your Company Tax Return, and it is also crucial that you hold on to any receipts, order and delivery slips. Remember to save any other documents that might potentially be useful.
In the worst case scenario if you fail to keep your accounting records, you will likely be fined £3,000 by HMRC or even suspended as a company director.
But when is the right time to let all paper go?
There will come a time when you can be rid of all those documents and bits of paper, and that is usually six years after the end of the last financial year that they are related to.
However, there may be some cases where you will need to keep your company’s accounting information. This is usually when there are specific transactions that overlap and extend over one year. This can also be the case if your business has purchased furniture or machinery that has been given a guarantee of over six years. You may have even sent off your Company Tax Return late.
Either way, HMRC have begun checks into the tax returns of organisations, therefore it is important to make sure you are efficient when it comes to your paperwork.