As a limited company director, you are responsible for keeping adequate financial records for the company for 7 years.

I asked a few clients of mine out of interest, if they could tell me what records they needed to keep. Most were able to name the obvious records, such as sales and what business expenses they put through but most did not know that one of the records is the workings of your stock take. This means explaining the closing stock on hand number that is in your year end accounts for the last 7 years.

HMRC can fine you up to £3,000 for inadequate records. This is why having a robust sales and expenses processing system is key. Once you have the process set up, you never have to worry about producing records should you receive a HMRC Compliance inspection.

This doesn’t mean just buying Xero or Quickbooks. If you don’t use the software correctly and record those receipts and sales records, then they are pointless to have.

Here is the link for records you need to be keeping as a director.

https://www.gov.uk/running-a-limited-company/company-and-accounting-records

Have you got all of these records? If not, make some time this month to ensure you do. They can make the key difference in HMRC inspections, as if you can not disprove HMRC’s assessment of tax you owe with actual records, then you will not be able to challenge it. Boring as it may sound, it really is important to ensure you have digitally if possible, all of your relevant business records so it’s never an issue for you to produce them.