Having formed your UK limited company you will have set about making your business a success. However, it is important that you also recognise the need to keep your company's records up to date. UK legislation requires that all limited companies adhere to reporting requirements. This is the responsibility of the directors of the company and failure to keep on top of these administrative duties can lead to your company being struck off the register and legal action being taken.
What should you do to avoid problems with accounting?
In the first instance it is important that you keep a record of all financial transactions you make on behalf of the company. The simplest way to do this is to open a business bank account for the company and ensure all incoming money is placed in the account and that all bills are paid from the account.
The next important point is to keep all receipts for payments made and issue invoices for money received. This will ensure you have a paper trail to show income and expenses.
Implement an electronic accounting system. This could be a simple spreadsheet or more complex dedicated accounting software.
Finally, employ the services of an accountant if you are not confident preparing financial statements yourself. At year end you will need to prepare profit and loss accounts, a balance sheet and a directors statement. Some of these documents will need to be filed with Companies House so must be prepared correctly. A good accountant may also be able to save you money in the long run by avoiding overpayment of tax and errors in your accounts.
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