Limited companies are legally required to keep and maintain a number of statutory registers and accounting records. As a company director, it is your responsibility to ensure that all of these company records and registers are accurate, up to date and made available for public inspection at the registered office address or Single Alternate Inspection Location (SAIL address).
Where applicable, you should keep the following statutory registers and company records at your nominated inspection address:
Unless otherwise notified, Companies House will assume that your statutory registers are held at your registered office address . If it is inconvenient to make certain records available for inspection at that address, you may keep some or all of them at a SAIL address instead.
You must notify Companies House if you keep any statutory registers at a SAIL address, and you must confirm which records are held there.
If you use a SAIL address, it should be situated in the same country as your registered office. You can only have one SAIL at any given time. You must notify Companies House if you move any records there, and you will be expected to confirm their location whenever you file an annual Confirmation Statement (previously called an annual return).
Companies are required by law to keep their statutory registers available for public inspection at their registered office or SAIL address every working day. Advance notice of the date and time of any proposed inspection must be provided to the company.
A minimum of 2 days’ notice is required if the requested inspection date coincides with the notice period of a general meeting of the shareholders, or a written members’ resolution. In all other cases, the required notice period is 10 working days.
The majority of limited companies keep all of their statutory registers together in a bound or loose-leaf folder or book. This ensures that all-important company documents are filed together and easily accessible for inspection purposes and for your own reference.
You may prefer to keep digital copies of your statutory company records instead of paper registers, or as a back-up to hard copies of these important documents.
Limited companies and limited liability partnerships (LLPs) are legally required to retain accounting records for a certain period of time. These records relate primarily to your firm’s profitability, which you must report to HMRC in your annual accounts and tax returns . To do this accurately, you’ve got to know exactly how much money is coming in and how much is going out. The best way to track the movement of these funds is through invoices.
The Companies Act 2006 states that private limited companies must keep accounting records for 3 years from the date they are made. Public limited companies (PLCs) must keep their accounting records for 6 years from the date they are created. However, UK tax law requires private companies to retain any records that are used for the purpose of completing tax returns for 6 years from the end of the accounting period to which the records relate.
Likewise, company law requires LLPs to keep all financial and accounting records (for the business as a whole and the individual LLP members) for a minimum of 3 years. However, tax rules require certain records to be kept for 6 years. As a general rule, it may be good practice to keep all accounting and company records for at least 6 years from the date they are produced.
Accounting records can be kept at your registered office, SAIL address, accountant’s office, or any other suitable location where you can access them when required. Records can be retained in their original format, digital format, or as part of a software book-keeping programme.
Limited companies need accurate accounting records to complete their annual accounts, Company Tax Returns, VAT returns, and PAYE reports. Directors must also keep certain accounting records to complete their Self Assessment tax returns .
LLPs require accurate accounting records to complete annual accounts, partnership tax returns, LLP members’ Self Assessment tax returns, VAT returns, and PAYE reports.
Failure to keep accounting records of an adequate and accurate standard is a criminal offence. Directors and LLP members can be fined or prosecuted unless it’s an honest and excusable error.
It would be wise to consult a reputable accountant to deal with your accounting requirements. This will ensure all obligations are met and carried out in accordance with UK accounting standards .
The best way to track the movement of your company’s funds is through invoices. Invoices will track your income, so they’re instrumental in calculating your bottom line. As long as you stick to a set organisation structure, it’s relatively easy to ensure your invoices are being adequately maintained.
The secret rests in utilising a no-nonsense, sequential filing system. It’s crucial that you accurately date and number each invoice and store them in two separate files – one for paid invoices, and the other for unpaid invoices. When you pay an incoming invoice, record the date and method paid, and move it into the appropriate file. Receipts should be treated in much the same way.
Mark Kohler , an author and accounting partner at US-based firm Kohler & Eyre, also recommends keeping a daily business journal to double up on each record. Although it might sound like overkill, keeping a business journal is actually a fantastic way to cross-check inevitable anomalies or oversights that crop up within your records. This can simply be achieved by regularly updating and backing up your calendar on Outlook or Gmail.
When in doubt, contact HMRC and ask for advice. After all, if you’re unable to produce certain statutory records, you could end up with a £3,000 fine. You may be fined even more if your records reveal inaccuracies. Deliberate and concealed inaccuracies could end up costing you a penalty of up to 100% of the potential tax revenues lost through your nondisclosure.
In this day and age, there’s an app for everything, including record keeping. Most of these apps are free to download, and some are more user-friendly than others. Because you aren’t technically required to keep a hard copy of invoices or receipts, you’re perfectly obliged to go paperless.
In fact, it might even help you reduce some of your printing and storage costs. Using a record-keeping app will also help you to get into the habit of recording everything in real-time. This will ensure nothing slips through the cracks.
To help you get started, here are five of the most user-friendly record-keeping apps currently on the market:
It’s worth mentioning that not all company record-keeping apps are HMRC-approved. There are strict guidelines in place concerning cash-basis and simplified expenses, so it’s always worth comparing different recording specifications before investing time and energy into a record-keeping app.
For your convenience, HMRC curates a list of company record-keeping and income tax apps .
A lot of small business owners tend to treat their company bank account like a personal income pool, but that’s the first step down a long and winding road to financial self-destruction.
From the second you form a new company, your business operations become their own separate entity in the eyes of the law. That means your company should have its own business bank account so that you aren’t confusing its income with your own personal finances. Not only will this help you to avoid the temptation of outstretching your personal means, but it will also prevent HMRC from accusing you of tax avoidance.
If you are forming a limited company, it also makes sense to open a business bank account because cheques made out to a limited company cannot usually be paid into a personal bank account.
That being said, it is not against the law to utilise your own personal bank account in order to run a UK business. Although it makes for a trickier accounting situation, HMRC does provide some guidance on the type of records you will be expected to maintain if you choose to go this route.
These records include:
So long as you keep detailed records of where your money is, where it’s coming from and how it is being spent, you should be able to satisfy all basic HMRC rules on essential record-keeping.
At the end of the day, accounting is an exact science. Unlike many aspects of running a business, there isn’t a lot of wiggle room when it comes to record-keeping. There is a right way and a wrong way to do everything, so you’ve got to tread carefully.
As long as you know the law, take advantage of technological tools, and keep your company accounts separate from your personal finances, there’s no reason you won’t be able to meet your statutory requirements with virtual ease.
Just remember: when in doubt, ask for professional advice. After all, it’s better to bother someone with a painfully obvious question than pay a painfully hefty fine later.
We provide digital copies of company registers with all of our company formation packages .