Help in keeping your financial records robust

March 26 2010

David Davies, a managing partner at TWD Accountants, describes the ever-increasing complexity in the jungle of financial records, and how his company is there to assist AOP members

If you are running a business, either self-employed or via a limited company, it is a legal requirement to keep accurate records to enable you to calculate the tax due on any profits. Record keeping is an essential part of running any business and failure to maintain accurate records could easily result in you paying more tax than necessary or even being prosecuted.

Record keeping does not necessarily have to involve employing a professional bookkeeper or investing in expensive computer software. An accounts ledger, diary notes or a computer spreadsheet may be sufficient to record your income and expenditure.

For those taking their business more seriously, the AOP offer an online bookkeeping programme, designed specifically for the small business and those with no bookkeeping experience.

Whether you use a manual or computerised system, separating your personal and business transactions is very important. You should have a bank account solely for business transactions, drawing money from this into your personal account as necessary. A credit card for business purchases is also a very good idea. Separating your business and personal life will make the preparation of your accounts easier and quicker, whilst offering a certain amount of protection should HM Revenue & Customs decide to investigate your business affairs.

When it comes to individual transactions, there are three general forms that require recording:

• Bank transactions, i.e. payments made into and out of the bank

• Cash payments and cash receipts

• Credit card payments

When deciding on how to record these transactions, you must identify which receipts and payments are cash, bank, or credit card. For all cash receipts, you have to be able to identify any cash you don’t deposit in the bank but use for sundry cash expenses or even general living expenses.

All these records and supporting receipts must be kept for five years and nine months after your annual accounts have been submitted to HMRC. A penalty of up to £3,000 may be charged for each failure to keep or to preserve adequate records in support of a tax return.

At the end of the year, you have a legal requirement to submit your final accounts and tax return to HMRC. Using an accountant to do this will not only save you a considerable amount of time and ensure that the amount of tax you pay is minimised, but will also reduce the chance of an HMRC investigation resulting in you having to pay more tax.

When it comes to choosing an accountant, hundreds of members use the services of TWD Accountants Ltd. Working with the AOP for over 11 years, the Stockport-based company is one of the UK’s most experienced firm of accountants in the optometric sector. With fees starting at £169+VAT for its tax return and accounts service for locum optometrists, the company also offers probably one of the most competitively priced services on the market.

The AOP’s online bookkeeping system is available via the AOP website and costs £35pa.for a non-VAT registered business and £45 for VAT registered businesses.

For a quote or further information on the services offered by TWD Accountants, or for information on the AOP’s online bookkeeping system, telephone Mr Davies on 0845 129 7017.