Yes. You must keep full accurate records for your business from the start. You need to do this whether you send in simple summary of your profit/loss, prepare the accounts yourself or have an accountant do it for you. It is important to remember that figures which are contained in your tax returns, your accounts or summary profits/losses, must be correct. The records you keep must be sufficient to enable you to make a proper return of income for tax purposes.
You should bear in mind that you need to keep accounts for other reasons other than tax, For example, your bank may want to see them when considering an application for a loan or mortgage.
The type of records you will need to keep will depend on the nature and size of your business. Business records can be kept on computerized systems or manually.
The records must include books of account which show
All supporting records such as invoices, bank and building society statements, cheque stubs, receipts etc., should also be retained.All payroll records must also be kept in the prescribed format.
At the end of the accounting period you will need to have details of:
A business, whether Sole trader, Partnership or Limited Company can claim for certain pre-trading expenses when calculating their profits.
Examples of pre-trading expenses are:
All these costs can be offset against the profits from the business.
In order to keep control of your transactions a full “double entry” book keeping system is recommended. Any system which falls short of this should be capable of showing the amount and source of:
Simply keeping the bank statements for the business is not enough – it does not fulfil your requirements to keep proper books and records.
You will need to submit:
A capital account and balance sheet may not always be required, depending on the circumstances and level of your trading activities.
Yes. If your business turnover is less than £81,000 per year simplified accounts can be submitted showing turnover and total expenses giving net profit/loss for the period.
You must keep your records for six years after the end of the accounting period.
Failure to keep adequate records, or failure to keep them for the necessary six years, is an offence and you could be heavily fined, typically £3,000.
It is not necessary to have an Accountant or Tax Adviser in order to complete your tax returns and claim the various allowances and relief’s due to you. However, for specific advice on book keeping and financial matters generally it would be in your own interest to have an Accountant. The tax office will normally correspond with your Accountant regarding your tax affairs, if you have one.
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