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Why you should keep proper business records

Published: 13/09/2018 By Kashif Azhar

Running a business as a sole trader, partnership or a limited company requires a good bookkeeping system so that it gives you an accurate idea of how well your business is performing.

In order to achieve this the following steps need to be taken:

Always make sure you pay your personal expenses from your personal bank account and not from your business bank account. If they are accidentally treated as a business expense the profit will not be correct.

If you do pay business expenses personally, keep the receipts in an envelope and make a note on it e.g. ‘Business expenses paid personally for the quarter ended 31.8.18’. Make sure you include these expenses in the profit and loss account otherwise the profit and tax liability will be overstated.

If your personal car is used for business, mileage logs should be kept and business mileage calculated. 45p can be claimed for the first 10,000 miles and 25p after that for one accounting year.

Reconciling the bank regularly is advised as it is  will be difficult to find mistakes if you leave this for a long time.

Records should be kept in a folder in date order and not just in a bag because as a business owner it is your responsibility to keep proper records. By keeping good records if there is an investigation by HM Revenue and Customs you will easily be able to find invoices which have been requested.

Don’t use bookkeeping software? No problem we can do it for you. You’ll have online access to view the latest reports e.g. profit and loss account therefore giving you more time to work on the growth of your business.

Please give us a call on 020 8661 7878 to discuss the bookkeeping services we offer