In this article we’ll explain what book-keeping is and when you might choose a book-keeping package over a full accounting solution.
Every business has a legal requirement to keep accurate records of their business transactions, known as Book-keeping. There is no set format that this must adhere to, however, at the very least all records of sales, expenses and purchases should be kept.
Even a small business can lose money by not claiming expenses, not spotting when overheads are higher than sale values or not reclaiming their full TAX entitlement.
Too busy? Here’s Book-keeping in 30 seconds.
- Book-keeping is a simpler form of accounting
- It suits smaller businesses and sole-traders
- You are required to submit your books annually to HMRC
- Well-kept books can show you where you could save money
- Your books can also help you with effective business planning
- Technology means you can access your figures 24/7
HMRC expect all businesses to keep accurate records, and submit them at least annually. Unfortunately if a business fails to keep adequate records then they can be fined up to £3,000 by HMRC along with an additional tax bill if the records result in an incorrect tax return being filed.
Apart from these obligations, keeping good records is an essential part of running a successful business. When good records are kept you know at any given time how much the business is owed from customers, how much money is owed to suppliers, and how profitable the business is. This means better decision making, business planning and the ability to pinpoint where improvements in cash flow and profitability can be made.
HM Revenue & Customs are investing considerable time and resources checking into the Bookkeeping of smaller businesses, being one of their main target areas for increasing tax revenues. It is therefore more important than ever for businesses to keep their records accurately and up to date.
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