Trading as a Company and Keeping Your Records

4 minutes
Company Secretarial and Company Formation

Contents

Once your limited company is set up, it's imperative to manage your finances effectively and ensure compliance with HMRC. Our guide explores bookkeeping software, invoicing, and expense tracking.

You’ve registered your new limited company, set up your bank account, and appointed your directors. You also understand the business taxes you may be liable to pay throughout the year.

The next step is to shift your focus to keeping your records in order, which is crucial to ensure you are prepared for tax returns and to streamline your invoicing process for completed work.

Additionally, it’s essential to understand and track your potential business-related expenses. You will be well-equipped to fulfil your tax obligations and effectively manage your finances by diligently keeping your records in order.

Read on for valuable insights and tips to help you establish an efficient record-keeping system, optimise your invoicing procedures, and clarify your business-related expenses.

Choose your Bookkeeping Software

Accurate bookkeeping is a fundamental aspect of effectively managing a limited company. It provides immediate insights into your business’s financial position, facilitates informed decision-making, and ensures compliance with tax obligations.

To maintain a clear understanding of your cash flow, it is crucial to have real-time access to essential financial data, including earnings, outstanding debts, liabilities, and dividends. Multiple bookkeeping software options, such as Xero, enable seamless transactions between the software and your bank, helping you stay up-to-date with your transactions and finances.

In addition to software solutions, we offer a comprehensive bookkeeping service. Our expert team can provide you with valuable financial recommendations, allowing you to focus on running your business with confidence and peace of mind. With our support, you can efficiently manage your finances and optimise your business operations.

Making Tax Digital (for VAT)

All VAT-registered businesses are legally obligated to maintain digital records and submit digital VAT returns. This process requires using compatible software that pulls information from your digital records to complete and submit the returns. Retaining these records for up to six years is required to comply with HMRC regulations.

The Making Tax Digital government initiative aims to simplify the tax system and make it more accessible for taxpayers to ensure accurate reporting. To facilitate this, HMRC recognises specific software options that meet their requirements. One such software is Xero, which offers seamless integration with your financial data. We can help configure your account set-up so Xero:

  • Automatically calculates the tax owed.
  • Extracts transaction data directly from your bank, invoicing software, or point-of-sale systems on a daily basis.

This functionality helps you stay on top of bank reconciliation and ensures accurate reporting.

Invoicing

An effective invoicing process is a vital for managing your limited company’s cash-flow and profitability.

Whenever a client purchases a product or service from your company, issuing a well-crafted invoice with all the relevant details helps accelerate payment from your customer.

A detailed invoice reduces the likelihood of client queries and ensures prompt payment. It is important to adhere to legal regulations when creating your limited company invoice. The invoice should include the following essential details:

  • A unique identification number.
  • Your full company name as it appears on the certificate of incorporation, company address, and contact information.
  • The company name and company address of the customer you’re invoicing.
  • Clear information about the product and/or service(s) you’re charging for.
  • The date the goods or service were provided to the customer.
  • The date the invoice is being sent.
  • The amount(s) being charged.
  • VAT amount (if your company is VAT registered).
  • The total amount owed.

You may also want to integrate with a direct debit service or an online payment processor to further simplify your payment collection.

Expenses

It is important to understand that limited companies can legitimately claim various business and business-related expenses, and the cumulative value of these expenses can be significant.

However, it takes time and effort to understand which expenses are claimable and effectively track them. Failing to do so may result in the company paying more corporation tax than necessary. In times of economic challenges, claiming every eligible expense becomes even more crucial, allowing you to reduce your company’s tax liability and maintain competitiveness.

Our comprehensive guide to limited company expenses outlines the primary categories you can claim, empowering you to maximise deductions and optimise your company’s tax position. Common examples of claimable expenses include:

  • Advertising, Marketing & PR costs.
  • Employee Salaries.
  • Office Rent.
  • Software Expenses.
  • Travel Expenses.

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