bizSimple

The simple way to start a business.

Sunday 7 September

“Although I can accept talking scarecrows, lions & great wizards of emerald cities, I find it hard to believe there is no paperwork involved when your house lands on a witch”

Dave James

Record Keeping

It is a legal requirement to keep proper records of your business's financial transactions. This includes copies of your bank statements, receipts, invoices, other account records, cheque book and paying-in book stubs, and credit and debit card statements.

It is best to try to develop a simple system that you can up-date regularly and keep on top of. You should also be able to use your system to see how your business is performing month by month. At the very least you should know the value of your sales, the amount of money you spent and the amount of profit you made.

You should also know your breakeven point so that you can make sure that you are on track to make money. The bizSimple Toolkit 02 shows you how to calculate your breakeven figure.

FAQs

Can I buy a ready made system for my computer?

Yes. There is a range of software packages on the market. What ever you buy make sure it suits your size of business – there is no point in buying a package that handles stock control and payroll if you do not need them. Some payroll packages come with on-going support and regular employment legislation up-dates. These are well worth looking into and could prove very useful, if you intend to employ people.

Can I do my books manually?

Yes. The only problem with manual systems is that they can take more time and can look messy after a while.

How do I know what expenses I can put through my business?

As a rule of thumb just consider whether you would have spent the money if you had not been running the business. If you can honestly say that the expense was incurred during the course of trading then you can put it down as a legitimate business expense. Toolkit 02 gives you a good idea of what you can offset when dealing with the financial elements of business planning.

How do I prove that I spent the money?

Keep receipts for everything – date them and write the cheque number on them if you paid by cheque. Store them in date order.

How long do I have to keep my records?

Six years. It is worth bearing in mind that if the Revenue do ever come knocking on your door it is up to you to prove that you spent the money; it's not up to them to prove that you didn't!

Where can I get help with my bookkeeping system?

HM Revenue & Customs run free courses on bookkeeping and annual accounts, contact their help line for more information.

If you are very busy and feel that you will never have the time, or the inclination to do your books yourself, you could consider employing the services of a bookkeeper to do your books on a monthly basis. This is a far better, and cheaper, arrangement than leaving everything to the last minute and then giving a box full of receipts and cheque stubs to your accountant!

Will I need to be registered under the Data Protection Act?

If you intend to store your customer details in a database then by law you must register this activity in order to conform with the Data Protection Act 1998 UK and its registration requirements. It is simple to do, and costs around £35 for a one year period.

The Data Protection Act 1998 covers any information that relates to living individuals which is held on computer, such as name, address, date of birth, opinions about the individual or any other information from which the individual can be identified.

If you store and process information about individuals who are customers, employees, suppliers, clients or other members of the public, you may need to join the Data Protection Act Register.

The standard notification fee is £35 – beware of any communications you might receive from companies requesting payment for data protection registration. There is no connection between the Information Commissioner and such agencies. If you do receive anything you are not sure of, contact your local Trading Standards office – do not reply or make any payments to these bogus companies.

For more information contact:

Data Protection Helpline: 01625 545745.
Data Protection Publications Line: 0870 600 8100
For more information on the rights of individuals: 0870 600 8100

For up-to-date and detailed information visit the DPA website.