HMRC has recently announced that it will be checking the accounts records of 50,000 businesses in each of the next three years, to see if the records are adequate and accurate. You could be one of those businesses. The penalties for any non-compliance they find can be up to £3,000, and there may be extra tax to pay, so you are advised to have everything in order before they come calling.
Records Can Help Your Business
This is not the only reason to make sure your ongoing accounting records are up to scratch. They are crucial for any entrepreneur to keep a handle on business affairs and financial control. Being able to know exactly how much cash has been paid in and spent means you know just how much is in the bank, and what you have to play with when making plans. It can keep you out of the red or within your arranged overdraft, so you can avoid associated hefty bank charges.
Equally important is being able to look back over your income and expenditure month by month, quarter by quarter, year by year. This helps you to identify patterns, opportunities and problems. When you know about the opportunities, you can work out how to exploit them. When you know about regular problems that are coming up, it could be easy to work out how to avoid them.
Getting Help from Bookkeepers
If you employ a bookkeeper and don’t qualify for a full annual audit, you might want to have someone independent come in and check that everything is in order, show you how to identify the highs and lows and what they mean. If you use an outsourced bookkeeping service, why not schedule regular quarterly meetings to discuss the peaks and troughs, where the opportunities might lie, and what can be done about the problems, if any. Your external bookkeeping service may well have observed similar problems with other clients, and be able to use this experience to advise you.