home office filing cabinets

Do you know what paperwork to keep, and for how long?

Running your own business can be very liberating, not to mention incredibly lucrative if the business is a great success. However, it also means you need to be super organised, particularly when it comes to record keeping. From proof of purchases to information for your tax return, here’s what you need to know about keeping paperwork for your own company.

Records that you should be keeping

As a business owner, it’s crucial to have a paper trail of records for certain transactions and payments. These include:

  • Records of your income and sales
  • Proof of any business expenses
  • VAT records if you are VAT registered
  • PAYE records if you have any staff working for you
  • Records about your own personal income from the business

These records are often kept for the purposes of tax. Your annual tax return will require that you have these records so you can work out your profit and loss for the year, as well as providing proof to HMRC as required. You need to ensure these records are accurate and up to date, so forming a usable filing system is crucial.

What counts as proof?

If you are asked by HMRC to provide proof of income, profits, losses and expenses, you should have approved documentation relating to those items. These could be:

  • Bank statements
  • Stubs from chequebooks
  • Receipts for goods and stock
  • Invoices, till rolls and paying in slips from your bank

You must keep these records for at least five years following the submission deadline for that tax return. It is possible that HMRC will want to check your records to ensure you pay the correct amount of tax for many years after the tax return has been submitted. For a business which is due to submit a tax return by 31st January 2018, this means you will need to keep the paperwork until at least the end of January 2023.

Use home office filing cabinets to get yourself organised

Organising your paperwork can be an arduous, time consuming task. If you feel like you’re becoming overwhelmed with paperwork, you’re not alone. In fact, the majority of small business owners spend around one to three hours every day on dealing with paperwork and administration.

Developing a workable system with your home office filing cabinets can really help to reduce this burden, making it easier for you to keep accurate, organised records of your activities. Try to organise every tax year into a drawer, and then use dividers to separate that year into different elements. These could be:

  • Client names
  • Bank statements
  • Bills and expenses
  • Tax documents
  • Invoices

How you organise your home office filing cabinets will depend on the type of business you are running. Many businesses are semi-paperless these days, making it easy to reduce the amount of forms and papers they have in the office. Others won’t require much paperwork at all, due to having very few clients or working on longer, discreet projects.

The larger and more complicated your business is, the more categorisation you’ll need to do, otherwise you’re going to end up with drawers bulging with receipts that you can’t make head nor tail of. If splitting your work into years doesn’t work, try organising it in quarters, counting anything paid for within that quarter as work completed.

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Last Modified / Updated on: May 24, 2018 at 9:02 am

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