Finsbury Park Business Forum

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Book Keeping

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The Importance of Bookkeeping in a Business

If you run your own business, no matter what size, bookkeeping is a legal requirement by H M Revenue and Customs.

Basic records you must keep

Your basic records will include:

• All business sales with copies of invoices issued
• All business purchases and expenses and associate invoices
• details of any money paid in or taken out personally from the business
• copies of business bank statements

These records can be used by yourself or your accountant to create a profit and loss account. This will show the sales income received and expenses paid. Your tax liability will be based on this. Other records you must keep

Each business is unique and may require a specific type of detailed record to be kept. Some examples include:

If accurate and complete records are not kept up to date you may end up paying more tax than necessary. This may be due to a lack of evidence of tax deductible expenditure or/and inaccurate sales records causing H M Revenue and Customs to assess your expected sales .

If you pay an accountant to prepare your accounts they will charge you based on how long it will take them. If your records are more accurate this will reduce the time taken and therefore reduce the amount they charge. The above reasons are sufficient to ensure you keep up to date accounts and records to ensure you have control over your business, assess its profitability and cash flow situation.