What are the requirements for record Keeping and document storage?
One of the most common areas of confusion for many businesses is how long you need to keep your documents or records. There are legal requirements from the government to keep certain documents for certain time frames. But the GDPR also tells us not to keep anything longer than is ‘necessary’ – so how do we work through this and find the middle ground?
Business records as self-employed
If you are self-employed as a sole trader or as a partner in a business partnership, you need to keep records of your income and expenses for your annual tax return. You will also need to keep records of any personal income that you have coming in.
You can choose traditional accounting systems where you record income and expenses by the date they were invoiced. Or you can use cash basis accounting where the income is recorded when you receive the money or pay the bill. Either way, you need to record all sales and income, business expenses, VAT records f you pay it, PAYE records if you have employees and details of personal income.
You need to keep your records for at least 5 years after the 31st January submission deadline of that relevant year. So records submitted for 2016-17 in January 2018 must be kept until at least January 2023. However once the tax year is passed and you have finished submitting returns and payments, you can move the documents to archive and document storage in Thanet. This means you can easily access them again if there are any queries.
Business records as a limited company
If your business is a limited company, then you need to keep records about the company itself as well as financial and accounting records. HMRC can ask to check these records at any time to make sure they are correct. You also need to keep records of:
- Directors, shareholders and company secretaries
- Shareholder vote outcomes and resolutions
- Promises for the company to repay loans at a future date known a debenture and who the money is paid to
- Promises to make payments if something goes wrong and it is the company’s fault (indemnities)
- Transactions when someone buys shares in the company
- Any loans or mortgages secured against assets of the company
As with self-employed people, you also need to keep comprehensive accounting records. This includes all money received and spent by the company, the assets that it owns, any debts or stocks, goods bought and sold and details of customers.
Accounting records need to include details of all the money the company has spent including receipts, petty cash books and delivery notes. It also should cover all invoices, contracts, sales books and till rolls for money coming in and also bank statements and relevant paperwork.
For a limited company, records must be kept for six years from the end of the last company financial year. So with the above example, the documents would need to be stored until 2024. But again, our Thanet document storage and archive service works best for everything that isn’t required on a daily basis.
By using our document archive & storage in Thanet, you can free up space within the business property while making sure you comply with regulations around document storage.
You can then easily access the documents if there is a query or request from HMRC.