Accounting Records

Do all companies have to keep accounting records?

The answer is a resounding ‘Yes’. Every company, whether or not they are trading, must keep accounting records. 

What must accounting records include?

Accounting records must in particular contain:

• entries showing all money received and expended by the company; and
• a record of the assets and liabilities of the company.

Also, where the company’s business involves dealing in goods, the records must contain:

• statements of stock held by the company at the end of each financial year;
• all statements of stock takings from which you have taken or prepared any statements of stock; and
• statement of all goods sold and purchased, other than by ordinary retail trade. This should list the goods, the buyers and sellers.

Parent companies must ensure that any subsidiary undertaking keeps sufficient accounting records so that the directors of the parent company can prepare accounts that comply with the Companies Act or International Accounting Standards.

Where must a company keep its accounting records?

A company must keep its accounting records at its registered office address or a place that the directors think suitable.  The records must be open to inspection by the company’s officers at all times.  

If the company holds the records at a place outside of the UK, it must send accounts and returns at least every six months and keep them in the UK.  Those accounts and returns must disclose the financial position and enable the directors to prepare accounts that comply with the requirements of the Companies Act, including where the accounts are prepared using International Accounting Standards.  

How long must a company keep its records?
Private companies must keep accounting records for 3 years from the date they were made. Public companies must keep them for 6 years.

The above is an extract from Life of a Company – Part 1 Annual Requirements – GP2 Chapter 3 as modified by the Companies Act 2006  – You can view the full text of GP2 here

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So what should I do?

For those of you who are using Spreadsheets as Accounting Records; Spreadsheets are fantastic tools for listing and analysing information, but they’re not for accounting!

OK, if you list all your financial information in a spreadsheet then that’s a big step forward over businesses who simply file loads of paperwork in Lever arch files.  However, it’s time to recycle those spreadsheets.  A small amount of effort on your part, with a helping hand from accware, of course, and all your information could be entered in an easy to use online accounting system, such as Xero, which will provide you with up-to-date information on how your business is performing.

Key Features:-

• Import your Bank Statements and easily reconcile transactions
• Send invoices and statements by email
• Set up recurring transactions
• Generate your VAT Return
• Access your information from anywhere there is an Internet connection
• No installation No backups, No maintenance
• Start enjoying doing your accounts?

Once you realise how easy Xero is, you can then start to explore the other web based applications that extend Xero further e.g. WorkflowMax, Vend, CapsuleCRM etc.

Click here for a full list of our services around Xero. 

Berwyn Myers