Legal Requirement

As a business owner, it is a legal requirement to keep financial records.  If you are a sole trader, HMRC might want to see them and if you are a Limited company you have to submit annual accounts to Companies House.

It is also a legal requirement whether you are a sole trader or limited company to keep financial records for six years.

Now this does not mean that you have to have six years, worth of paperwork in six lever arch files. As long as you keep financial records of some sort that is fine. So having an accounts software package or a detailed spreadsheet is fine.

So, lets look at the best way to keep your financial records.

Expense Receipts

What do you do with those pesky little receipts, that clog up your purse or wallet? Those little receipts that you bung into your bag, pocket, or glove compartment?

My advice is getting into the habit of taking a photo of them before you put them away in your pocket. You then have a copy to refer back to when you need it. You can also get apps like Receipt Bank that you can use to upload photos of receipts to your accounts package.

There are lots of similar apps that do the same job, maybe ask your accountant which one they use.

Filing Method

Take a bit tip from me, invest in some stationery!  If you outsource your accounts to a bookkeeper or accountant, and you have a year’s lot of paperwork all bundled up in a bag, believe me they do charge you for sorting it out! 

Back in the day when I was a freelance, Finance Manager clients would hand me a bag or A4 envelope of receipts in not any order.  I would then put my timer on and charge them for the time it took me to sort them.

Save yourselves some money and sort your paperwork into some form of order, by month if you can. Invest in some polyethene pockets and put all your monthly expense receipt in one. Buy a lever arch or clip file and some monthly dividers and clip them all together.

If you don’t use an only accounts software, and print your bank statements for your accountant, then make sure you write on them what each transaction was for. They have no idea what you were buying from Amazon or PayPal!

You could also start a little spreadsheet, keeping track of your income on one side and your expenses on another.  This is a great way of keeping track and giving you visibility and more control of your finances.

For help with tracking expenses please download my free Expenses Tracker, by clicking on this link.