Admin can be both boring and overwhelming. Record keeping is seen as mundane and time-consuming. But, as much as business owners want to push record-keeping to the side and leave it for another day, good business record keeping is crucial – and it is especially vital for good long-term business.
The Basics Of Record Keeping
Record keeping is plainly the act of recording transactions and appropriate events in an accounting system. It sounds simple enough, but accounting relies heavily on the accuracy and strictness of thorough records. Record keeping forms the basic foundation of accounting.
- Let’s take a look at some of the records used for accounting purposes. Every business transaction has, or should have, a form of record written evidence of transactions concerning your business activity. These include:
- Bank statements
- Documents exchanged with customers
- Accounting ledgers
- Journals and account documents detailing income and expenses
- Documents detailing assets and liabilities
- Documents detailing profits and losses
- Documents for tax purposes, assets and good disposals
- Proper records and accounts of business transactions
Other basic records include ledgers or records for business expenses, sales records, employee records, contracts, and purchase orders.
Keeping Proper Records
How To Keep Records
Creating a daily, weekly, and monthly record-keeping habit is regarded as the best practice for standard business. It is highly advisable that you keep your records both digitally (computer-based systems) and in physical form (hand-written or printed), and within a safe, secure place – including the registered office. No matter how you do it, it’s important to do it. Remember, you could always look at hiring a professional Corporate Secretary to do it for you!
How Long To Keep Your Records
Let’s talk about record keeping in terms of timeframes. While some sources recommend that business owners should keep business records for a minimum of five years from the end of the financial year in which the relevant transactions were made, others recommend keeping them as long as may be needed to prove your income or deductions on a tax return. In general, this means that you need to keep your taxation records for a period of three years from the date the tax return was filed, or from the due date of the tax return (whichever is dated later).
It’s also good to note – as advised by our record keepers and Corporate Secretary – that this rule doesn’t apply to all records and documents. For example:
- If you have employee and tax records
- If you omitted income from your return
- If you deducted the cost of the bad debt or worthless securities
- If you file a fraudulent return or no return at all
- If you have records connected to the property
With these documents, we recommend that you speak to a record keeping professional or Corporate Secretary who will guide you on appropriate timeframes.
Why Does Good Record Keeping Matter?
From avoiding problems and conflicts within your business to effectively managing operational, legal, and regulatory costs by improving your business overall, record keeping (and the good practice thereof) provides the following benefits:
- Compliance with laws and legal requirements
- Benefits all business operations
- Prevents theft and fraud while providing a full understanding and awareness of cashflow
- Helps in the creation of on-time, accurate financial statements come audit season
- Supports the the creation of tax returns and the tracking of company progress and related financial statements
- Makes the setting of prices easier and calculating expected profits a breeze
- Access business information easily
- Helps to make document comparisons and document finding quicker and easier
- Helps in making the best, wisest business decisions when evidence is easily accessible
Hiring a Corporate Secretary for your record keeping boasts numerous benefits too, such as saving you time, eliminating errors, and allowing you to focus on business growth and important tasks!
What Happens When Record Keeping Is Done Wrong
Should you face non-compliance consequences due to improper record keeping or merely doing it only for the short-term, then you can expect to face serious consequences. These could be range from the severe such as jail time, a massive fine, or sometimes the lesser severe such as a penalty, among other consequences experienced in business activities and daily processes.
Start Good Record Keeping Today
You can avoid facing these negative consequences, among other business issues or problems, by making sure that you comply with the requirements for record keeping in the long-term. We can help you with this by helping you organize your documentation disorder. Our Corporate Secretary and record keeping solutions will solve your business record keeping needs – for good.
ALP Peak offers our B2B clients the benefits provided by professional, cost-effective outsourced accounting. We offer:
- Bookkeeping and Record Keeping Services
- Corporate Secretary Solutions
- Incorporation of Business Solutions
- IT Outsourcing
Our services are high quality, transparent, and reliable. Start your one-month FREE TRIAL today, with no strings attached.