1. Every business is different – you need to do what is right for you/your business.  Limited companies, sole traders  and partnerships will all work differently.
  2.  Have a separate bank account solely for business and try to put all your transactions through this.   This is what your accountant will check against when they do your year end accounts.  Receipts for cash payments can be lost or mislaid and then you have no proof of the transaction.  Try not to take cash payments for work as this again will flag you up as potential for a business records check.
  3.  Make time to do your book-keeping.  Depending on the size of your business and how many transactions you have, this could be daily or weekly.  At a very minimum you should be doing your book-keeping on a monthly basis.
  4.  Keep it simple and consistent.  You could use cashbook, spreadsheets or if you want to keep track of debtors and creditors buy a simple accounting package.  Don’t buy an accounting package without checking with your accountant whether it is appropriate, how good they think it is and whether your accountant has the ability to use it.
  5.  Only claim for items that have been incurred solely for business use.  Anything that is put through which HMRC find is for personal use will trigger a more investigative search of your records.  Claim for every expense incurred in connection with the business, for instance if you use a room in your house to run the business from then you can legitimately claim a proportion of your household running costs for your business.
  6.  Have a filing system that makes it easier to cross reference to your records.  This could be in date order, alphabetically or numerically.  My top tip is to consecutively number both your sales invoices and purchase invoices and reference them back to the records.  If you have a tax or vat inspection this makes it easier for the inspector to check the records.  All accounting records need to be kept for 7 years.  However, if any discrepancies are found, HMRC have the right to check the records back to 10 years.
  7.  Make sure that your sales invoices state your terms and conditions, for instance 14 days payment.  Keep it professional when chasing for money, for instance by sending a statement of account when the invoices have been outstanding for 30 days.  Keep a record of when statements have been sent.  Don’t chase for money by phoning or texting as you will have no record of this if a dispute arises.
  8.  Know your deadlines.  You need to make sure that VAT returns, PAYE returns, accounts filing dates etc. are submitted on time.  You will be fined by Companies House or HMRC if anything is submitted late.  It will also flag you up as potential for a business records check.
  9.  Know your thresholds.  Are you nearing the VAT registration threshold.  If so, you will need to register.  It may be worth considering whether you would be better off by operating the flat rate vat scheme.
  10.  Consider outsourcing some or part of your record keeping or accounting functions if you are experiencing any difficulties or it causes you any anxiety.  For instance, if you employ staff and are having trouble in keeping up with changing legislation, it may end up being cheaper and easier to outsource your payroll function to an accountant or payroll bureau.

Helen Fielding

Wellfield

Accounting Services Ltd

___________________

Tel:  01244 853827

www.wellfieldaccountingservices.com

http://uk.linkedin.com/pub/helen-fielding/17/803/344

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