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Accounting Records for Limited Company

There are legal requirements for company accounting and record keeping. This guide explains what records you need to keep for a limited company.

KEEPING RECORDS: Bookkeeping is part of running a limited company.

The records must show how you worked out the company financial accounts and the tax returns.

Record keeping and accounting for limited companies is particularly strict.

There are legal reporting requirements for HM Revenue and Customs and at Companies House.

You must also make some accounting records of your limited company available for public inspection.

The most important company and accounting records you must keep include:

  • Financial records and company accounting records.
  • Records and registration details about the company itself.

What if you need to get help with tax issues and limited company accounts? In this case, the best person to hire is a professional in taxation (such as an accountant).

HM Revenue and Customs often perform Income Tax compliance checks. One reason tax affairs get checked is to ensure the company pays the right amount.

Records You Must Keep about the Company

There are some specific records about a limited company that you must keep. Make sure you keep the appropriate details of:

  • All directors, shareholders, and the company secretaries.
  • Any mortgages or loans secured against assets in the business.
  • The results and outcomes of any shareholder votes and resolutions.
  • Promises made by the company to repay loans at a specific date in the future. You must also record who the loans will get paid back to. This type of long-term security yielding is also called ‘debentures’.
  • The transactions taking place if someone buys shares in the company.
  • Promises made by the company for ‘indemnity’ payments. That means the company would pay if something went wrong and it was due to a fault of the business.

Note: It is not uncommon to keep some accounting records at a place other than the registered office address. The rules of accounting allow this but you must file a change with Companies House.

People with Significant Control Register

The register of any ‘people with significant control‘ is a part of record keeping for a limited company. The PSC register must include information and details of anyone who:

  • Has over 25% of the shares or company voting rights.
  • Can appoint or can remove a majority of the directors.
  • Can influence or can control the company or a trust.

Note: You must keep a record even if there are no ‘people with significant control’ listed in the company register.

Limited Company Accounting Records You Must Keep

All limited company accounting records must get kept that include:

  • All money received by the business, the money spent, and goods bought and sold by the company.
  • Who the business bought them from and sold them to. An exception applies for retail businesses.
  • Details of assets that the company owns and any stock owned at the financial year end.
  • Any stocktakings used to work out the stock figure.
  • Debts owed by the company and any debts owed to the business.

There will be other information, financial records, and calculations that you must keep. It will include those needed to prepare and file annual accounts and prepare a Company Tax Return, such as:

  • All monies spent by the company. Examples include petty cash books, receipts, order notes, and delivery notes.
  • All monies received by the company. Examples include contracts, invoices, till rolls, and sales books.
  • Any other relevant documentation. Examples include bank statements and mail correspondence.

Note: Failing to keep valid and accurate accounting records can result in a fine of £3,000 issued by HMRC. You can also get disqualified as a company director in the worst cases.

How Long to Keep Limited Company Accounts?

As a rule, you must keep the majority of records in a limited company for six (6) years. That means six years from the end of the last financial year that they relate to in the business. But, you will need to keep some records for longer if:

  • The files show a transaction covering more than one of the company accounting periods.
  • The limited company records relate to something that company has bought which it expects to last for more than 6 years. Typical examples include machinery or electronic equipment.
  • The company sent in a late Company Tax Return or it is the subject of a compliance check by HMRC.

Lost or Stole Limited Company Records

Accounts and records for limited companies sometimes get lost or stolen. You must try to replace all limited company records after they got destroyed, lost, or stolen. If this becomes impossible you must then:

  • Do whatever you can to recreate the accounting records.
  • Include this information in the Company Tax Return.
  • Inform your Corporation Tax office without delay.

Corporation Tax: General Enquiries
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Accounts and Record Keeping for Limited Company in the United Kingdom