20 Nov How long do I need to keep my business records?
When you start a business, whether freelance or a limited company, it’s easy to forget about all the statutory accounting obligations, including retaining business records.
Unfortunately, this can result in fixed penalties, fines and interests that cost your business significantly. So, it’s vital to know how long to keep your business records so that you can quickly produce them when the HMRC comes knocking.
How long to keep your business records
It all depends on your business structure.
1. If you run a limited company
Generally, you must retain your limited company’s records for around six years from the end of the accounting period. This includes, but is not limited to:
• Business expenses
• Sales documentation
• Money paid into and withdrawn from the company
• Details of business assets and loans secured against business assets
With professional limited company accounting services, you can better understand what records you need to keep.
It’s essential to note that you may need to keep some documentation for ten years. This includes your company’s statutory books and VAT MOSS.
2. If you’re self-employed
If you’re an unincorporated business partnership or sole trader, you need to keep your records for at least five years after 31st January of the relevant tax year. This includes VAT documentation, personal income, business expenses and sales documentation. It’s advisable to get freelance accounting services to know all the business records you’re required to retain.
If you’re the subject of an HMRC investigation, you’ll have to keep these business records until you’re informed otherwise. Similarly, if you receive a government grant, you need to retain the documentation for four years, starting from when you received it.
What happens when I lose my business records?
If your business records get stolen or lost, inform HMRC immediately. Since you can’t replace them, you’ll have to do your best to recreate them as you’ll still have to produce them upon request.
Alternatively, you can avoid such issues altogether by investing in cloud accounting. This way, you can keep your records digitally for years to come while preventing loss and theft.
Contact SQK Accountancy today for limited company accounting, freelance accounting and cloud accounting services.