It’s nearly April, which means business owners across the UK are scrambling to get their accounts prepared and filed in time, and their tax returns done before the deadline. Even if your business has gone fully digital, you will still find paperwork that needs to be sorted, filed with HMRC and kept for the mandatory 7 years. Receipts, payslips, bank statements – you need to keep it all. But how do you manage all of this paperwork, and what do you do with it when reporting season has been and gone?
What Needs To Be Kept?
According to HMRC, you need to keep complete and readable records of all of your business income and expenses, and submit them along with a full set of accounts at the end of the tax year. For the majority of UK businesses, this falls in March, since the new tax year begins on April 1st. To ensure the submissions are complete, you will need records of all receipts, invoices, purchase orders, bank statements, and anything else representing money going in or out of your business. If you’re self-employed, you will also need to keep records of your personal income (and its sources) to ensure you are taxed at the right rates.
How Do I Store It All?
During the year, many businesses operate an archiving system of some sort to keep track of their current year paperwork. Whether that’s a filing cabinet, digital folders for invoices or even a simple envelope system. Most people have some way to store it all as they go. But what so you do when it’s all been submitted, and you don’t need to keep it in your office drawer anymore? While your instinct might be to destroy, or throw it all away – you can’t indulge it. The fact is, you are required by HMRC to keep records of those things for 7 years, in case you are audited by the government. The easiest way to do this is by placing all of it into an A4 filing box (with an envelope inside for smaller items like receipts) and storing that box in a quiet, disused corner of your office – or in a storage unit. After 7 years, you can take the whole box and simply dump it in a shredder.
What About Going Digital?
Why yes, you can. In fact, HMRC is encouraging businesses to ditch the paperwork and go completely digital in their filings. This means scanning all of your receipts, destroying the physical copies as you go and keeping organised digital records instead. This means everything needs to be labelled appropriately, stored in the right places and easily identifiable to both accountants and HMRC. After the filing is done, you can create a zip file to archive it all in, and then securely delete it once 7 years have passed. It’s much simpler, cleaner and better for the environment too. Just make sure you have a good set of back-ups in place, and your cyber security is up to scratch to avoid data breaches.
Another change for HMRC is a new set of filing rules, which will see businesses filing accounts once a quarter, instead of once a year. This means businesses will need to keep more detailed, consistent records, and invest more time into filing and destroying paper data. At Greenaway, we specialise in helping businesses meet their legal obligations when it comes to the handling and destruction of business data. We become your partner is data destruction, and with our help, your end of year accounts become a little easier! For more information, just get in touch with us today.