King Street’s Guide to Financial Reporting
It’s lawful requirement of all businesses to keep financial records relating to it.
The benefits of keeping up to date records are vast and they become key indicators of how well you are doing as a business. Keeping regular, accurate records will save you time and therefore save you money whenever you need to produce financial reports.
You can be assured by your own calculations that you’re paying the correct amount of tax that you owe. The large tax rebates seen over the past 3 months show how that even the Government and HM Revenues & Customs can get it wrong from time to time. They can also keep you up to date with your debts and debtors.
This is a basic guide from King Street Industrial Estate on financial reporting to show you what you should be including. To run a tight ship you should keep 6 basic sets of financial archive.
Cash sales book, cash purchase book and cash summary book
The cash book is the central record of all incoming and outgoing money, it’s often referred to as cash flow. To complete a cash book you must amass and keep hold of records such as cheque book stubs, bank statements and receipts.
It is easier to keep a separate record for sales and purchases because once turnover exceeds £73,000 it will help calculate your VAT liability (difference between the VAT you reclaim and your total sales VAT) because this amount is the VAT registration threshold.
This records your businesses sales, the amount received for goods and services and money owed and the end of each month. It is an extremely useful business planning tool that allows you to keep track of and pursue slow payers and to see which of your customers are most profitable.
This records all purchases you make as a business. It will help you to monitor your business’ spending and how much money you owe to creditors at any one time. It will also give you a record of your most regular suppliers and how much you have spent with each.
Wage book (if you employ staff)
If employing staff, then a record must be kept of how much you pay each of them and the deductions made from their wage. Wages are the most significant costs to small businesses, keeping a record of them will help you to easily deal with any staff questions regarding self-assessment and also you will be able to prove you pay the national minimum wage and equal pay for work of equal value should you ever need to.
A business owner must by law maintain financial records and keep them as a general rule for a minimum of 6 years.
It is important to keep relevant, accurate records that are up to date as failure to back up statements made in income tax or VAT assessments can result in penalties.
For further information Business Link East run workshops to let you know about financial practices for small business.
If you have a small business then an industrial unit, small warehouse or workshop at King Street Industrial Estate could be just what you need to prosper.