What company records and registers do I have to keep?
Limited companies must keep business and accounting records of all income, expenditure, assets and liabilities, as well as statutory registers, copies of all accounts and statutory filings, minutes of meetings and decisions taken by directors and shareholders.
Limited companies are legally required to keep and maintain a number of statutory registers and accounting records. It is the responsibility of the director (or company secretary, if one is appointed) to make sure these registers and records are accurate, up-to-date and made available for public inspection at the company’s registered office address or Single Alternate Inspection Location (SAIL address).
Statutory company registers and records
Where applicable, you should keep the following statutory registers:
- Register of members (shareholders or guarantors).
- Register of directors.
- Register of directors’ usual residential addresses.
- Register of secretaries.
- Register of People with Significant Control (PSC).
- Directors’ service contracts.
- Register of charges and instruments creating charges (i.e. mortgages, secured loans).
- Minutes of board meetings and shareholders’ meetings.
- Copies of decisions and resolutions.
- Record of directors’ indemnities, (security against liability claims or legal costs).
- Record of debenture holders.
- Record of the sale of company shares.
Where to keep your company registers
Unless otherwise notified, Companies House will assume your statutory records are held at your registered office address. If it is inconvenient to make certain records available for inspection at your registered office, you may keep some or all of them at a SAIL address.
You must notify Companies House if you keep any statutory records at a SAIL address, and you must confirm which records are held there.
A SAIL address has to be 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, and you will be expected to confirm their location whenever you file an annual confirmation statement (previously called an annual return).
Inspection of statutory registers
Companies are required by law to make their statutory records available for public inspection at their registered office or SAIL address every working day between the hours of 9am-3pm.
Advance notice of the date and time of 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.
How to keep your statutory registers
The majority of limited companies will keep all of their statutory registers together in a bound or loose-leaf folder or book. This ensures all important company documents are filed together and easily accessible for inspection purposes.
If you wish, you may keep digital copies instead of, or in addition to, your paper registers.
Company accounting records
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 tax return. 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 will be 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 made. 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 is good practice to keep all accounting and business records for at least 6 years from the date they are produced.
Accounting records you should keep
- Record of goods and services bought and sold.
- Record of income and expenditure.
- Sales books.
- Petty cash books.
- Invoices and receipts.
- Orders and delivery notes.
- Till rolls.
- Business bank account statements.
- VAT records, if applicable.
- PAYE records for employees, if applicable.
- Record of assets and liabilities.
- Statement of stock at the end of each financial year.
- Record of dividend payments, if applicable.
How and where to keep accounting records
Accounting records should be kept at your registered office or SAIL address and made available for inspection. Records can be retained in their original format, digital format or as part of a software book-keeping programme.
What are accounting records used for?
Limited companies need accurate accounting records to complete their annual accounts, Company Tax Returns, VAT returns and PAYE returns. 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 returns.
Failure to keep accounting records of an adequate and accurate standard is a criminal offence. Directors and LLP’s 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.
Top tips for effective record keeping
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 get landed with a £3,000 fine. You could 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.
Get a company record-keeping app
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:
- Intuit MyBizTracker: MyBizTracker was specially developed by the creators of QuickBooks in order to provide small business owners with a swift, on-the-go snapshot view of their corporate financials. The app allows you to record income and expenses in real time, and it also lets you snap photos of your receipts so that you’ve got multiple records of each transaction. MyBizTracker is free to download for all Apple devices.
- FreeAgent: FreeAgent is a new record keeping app that boasts the same photo features as MyBizTracker. However, FreeAgent is unique in that it is able to calculate a fairly accurate snapshot of your company’s tax liability at any given moment. FreeAgent is free to download for all Apple devices.
- Sage Record Keeper: Record Keeper provides business owners with an all encompassing accounting solution for everyday use. Produced by Sage, one of the globe’s most popular suppliers of enterprise resource planning, the app has a number of advanced features. One of the most desirable aspects of Record Keeper is its ability to process Construction Industry Scheme reductions. Sage Record Keeper is free to download for all Apple devices.
- Forbes Receipt Keeper: If you’re an Android customer, Forbes Computer Systems offer a sterling accounting product in its Forbes Receipt Keeper app. The Forbes Receipt Keeper boasts many of the same features as the other apps listed; however, it enjoys a partnership with the cloud service Dropbox that enables you to instantly back up all of your accounts. Forbes Record Keeper is free to download for all Android devices.
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.
HMRC curates a list of company record-keeping and income tax apps here.
Keep personal finances separate
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 separate business bank account because cheques made out to a limited company cannot usually be paid into a personal bank account. To learn more about the advantages of opening a separate business bank account, click here.
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:
- Bank and building society statements: You must retain copies of each and every bank statement and passbook for any account that contains money from your business.
- Personal drawings: If you do not have a separate business bank account, you will need to keep a detailed breakdown of each bank statement outlining which cash withdraws were business related and which were personal.
- Source of funds: You are required to keep a record of any private money brought into the business and where it came from, even if it was gifted from a friend or relative.
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.
Get it right the first time
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 and wrong way to do everything, so you’ve got to tread extremely carefully. As long as you know the law, take advantage of technological tools and be sure to 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 always better to bother someone with a painfully obvious question than pay a painfully hefty fine later.
Rapid Formations Services
We provide digital copies of company registers with all of our company formation packages, with the exception of the Digital Plus Package. The option of a hardback loose-leaf company register is also available during the company formation process, or afterwards through our Online Admin Portal.