Along with several other factors to carry out a business successfully, the Importance of Maintaining Accounting Records still is in the business limelight. It can cause a chaotic business situation if you are unable to maintain accurate accounting records.
Moreover, this can lead to struggling with legal repercussions because you can’t keep up with paying the right amount of tax. The accounting records are meant to be safe for a long period of time. The question that arises here is how is it possible to maintain accounting records in an accurate manner.
This handy blog is a comprehensive guide if you intend to learn about Maintaining Accounting Records. See below for the details:
- Accounting Records In A Nutshell
- The Importance of Maintaining Accounting Records
- Learn to Store Accounting Records
- The Bottom Line
Accounting Records In A Nutshell
To carry out your business in a successful manner, it is important to maintain your accounting records carefully. You might wonder what exactly comes under the definition of accounting records. These are the important elements that are included to manage the accounting records.
- Self-assessment tax returns and company tax returns, old annual accounts are needed to be saved as they might be needed in the future.
- PAYE Records
- VAT records
- Expense and purchase records
- Income and sale records might include bank statements, sale invoices, till rolls and cash receipts.
- Details related to the assets of the company
- When the financial year ends, the stocks are also needed to be a part of the record.
- Statements that explain buying and selling of goods and products. There should be a detail of buyers, sellers, and the goods.
- Debts that the company owe to others.
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The Importance of Maintaining Accounting Records
It is a legal requirement and an obligation to have an accurate record of accounting. In case you are unable to maintain the accounting records or maintain them well as directed, your company will be disqualified as per the instructions of HMRC. You have to pay the fine charged by HMRC as well.
To realise the importance of accounting g records, the following reasons are also included:
- The records are a way forward to ensure business growth because they will clearly identify the weaknesses and the strengths of the business over a specific time period.
- Accounting records will help to reduce the tax payment and maximise the claim of expenses.
- In case a company is gone under the inspection of the HMRC, the accounting records of the past will be required by the inspector.
- For the purpose of cross-checking, the past records will help to give you the details of all the transactions. You will be more than satisfied.
- At times it is required to disclose the financial health of the company, accounting accuracy will save the moment to provide transaction details of the company.
Learn to Store Accounting Records
In the case of a limited company, a time period of six years is suggested to keep the records protected. Following are the conditions that will bring you under the obligation of keeping the records for a long:
- There is a compliance check on your company as an investigation by HMRC.
- The tax returns that your company has sent are late.
- The company has added something to its asset that purchase will last more than six years. Machinery or other such equipment are examples.
- There is an evident transaction that is more than the amount of the accounting period of the company.
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The Bottom Line
Finally, the discussion of the Importance of maintaining Accounting Records is wrapped up since you have gathered enough information to make the right business choices. The work habit of keeping the accounting and finances of your business aligned and in order ensures rapid business growth.
There are plenty of professionals who offer to do the job with the required standards of accuracy. This professional help always spares time for you to focus on your day-to-day business affairs and ensures the efficacy and accuracy of your accounting as well.
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Disclaimer: The information about the Importance of maintaining Accounting Records provided in this article is general in nature. This does not intend to disregard any professional advice.