Set up a basic record-keeping system

Whatever kind of business you run, you are required by law to keep financial records. There are also a number of business benefits to be gained from keeping accurate records such as it saves you time and money whenever you need to produce financial reports. It ensures you only pay the tax you owe and helps you keep an eye on financial activities.

Record-keeping tips

1. What should my record-keeping system include?

There are six basic sets of financial records:

• the cash sales book (XLS, 19K)
• the cash purchases book (XLS, 19K)
• the cash book summary (XLS, 19K)
• the sales ledger (XLS, 19K)
• the purchase ledger (XLS, 20K)
• the wages book

2. Get a system in place

Spend time setting up a system that you stick to. Allocate a regular time every week or month to deal with your financial administration or make it a key responsibility for a trusted employee or manager. It is also advisable to file all receipts logically.

3. Separate your professional from your personal finances

It is best to treat the business as a separate person, from which you only take income in the form of wages, dividends, and in claiming back business expenses against receipts.

4. Make security a priority

The fewer people involved in your record-keeping, the fewer errors that are likely to creep in. It is a good idea to password-protect your company records and only divulge the password to those that need it.

5. Safely store hardcopies of your records

Even if you choose to keep all your records electronically, it is vital that you keep a regular electronic back-up and a paper copy elsewhere. Store records that cannot be copied, such as cheque book stubs and paying-in books in a fireproof box.