Statutory accounts are statutory because your company must prepare and file them each year by law.
However, keeping accounts for a limited company is about more than staying on the right side of compliance.
Good accounting means you’ll always know how much cash you’ve got coming in and going out and whether you’re making a profit.
You simply cannot afford to neglect your company accounts.
What Records do Companies Need to Keep?
You must keep financial accounting records, and records about the company itself.
Your accounting records should include:
- All the money your company spends and receives, including any money from government grants, such as Coronavirus support schemes
- Debts the company owes and debts owed to the company
- Details of your company assets
- Stock the company owns at the end of the financial year and the stocktaking method used to reach this figure
- All goods the company has bought and sold, including who the company bought them from and sold them to
Your company records should include details about:
- Directors, shareholders and company secretaries
- Results of shareholder votes and resolutions
- Debentures – promises for the company to repay loans on specific future dates
- Indemnities – promises the company makes for payments should something go wrong that is the company’s fault
- Loans or mortgages secured against company assets
When you prepare your annual company accounts and tax return, you’ll need various financial records, calculations and other information.
You should maintain proper records of all these, including:
- Receipts, orders, delivery notes, petty cash books
- Invoices, contracts, sales books, till rolls
- Banks statements and correspondence
You’re legally required to keep accounting records. If you don’t, you could face a £3,000 HMRC fine or even disqualification as a company director.
Best Practices for Keeping Accounts and Company Records
First, put a system in place for your bookkeeping. You need to keep on top of all your accounting records, including your income, expenses and tax.
Keep simple records and keep them up to date.
The easiest way to do this is to use a cloud-based accounting platform, such as Xero.
Bookkeeping doesn’t need to be complex, but it does need to be regular and accurate.
Turn it into a habit, with a definite schedule for keeping track of your accounts routinely.
By staying on top of your company accounts in this way, you should avoid any nasty surprises at the end of your financial year.
Give each invoice you send out a unique number and stick to the system you establish. This will make it much easier to track the information you’ll need for your statutory accounts.
Keep all your petty cash receipts and record everything you spend.
Check your bank statements regularly. These should match your own records. If there are any discrepancies, don’t ignore them but investigate thoroughly. Sometimes the bank can make mistakes. If you’re using Xero or a similar cloud accounting platform, this will reconcile your accounts with your bank statements automatically.
Keep a close eye on your turnover. If you’ve not registered for VAT and your taxable turnover goes over the VAT threshold during the financial year, you’ll need to register for VAT.
How to Keep Accounts for a Limited Company
The straightforward solution is to hire a professional to do your bookkeeping and statutory accounts for you.
This lightens your administrative load while giving you peace of mind that your accounts are in safe hands.
For more information about our cloud accounting services for SMEs, please contact us.
