Self Employment Tax Guide
Bookkeeping
Bookkeeping is an essential part of any business operation as it helps to keep track of all the financial transactions of the business.
Some advantages of bookkeeping are as follows:
Maintaining good records assists in effective decision-making
Most business decisions involve a financial element. Having access to accurate and up-to-date information will assist you with your decision-making processes.
Bookkeeping will allow you keep organised with your customers and suppliers
You need to know quickly and accurately your sales and purchase ledger balances to allow you to resolve and take further action on outstanding/disputed sales and purchase invoices.
Preparation of management information/accounts
It is vital to review management accounts information on an ongoing basis. This allows you to quickly assess the profitability of your business and can assist when estimating future tax and NIC liabilities. It is also vital information when making business decisions.
Applying for finance agreements, loans and mortgages
Orderly financial management information is very important when applying to obtain finance. Banks and financial institutions favour individuals who have organised and accurate business records. This can often lead to a quicker lending decision.
Helps to avoid incurring late filing and payment penalties
The late filing and penalty regime can be costly. Keeping organised records will help to ensure that you never fall foul of the strict filing and payment deadlines imposed by HMRC.
It is a legal requirement to keep good bookkeeping records
You must keep your records for at least 5 years after the 31st January submission deadline of the relevant tax year. HM Revenue and Customs may check your records to make sure you're paying the right amount of tax.
