As a limited company director, you’re in charge of running it, so you’ll need to keep records about the company in addition to financial and accounting records.
You’ll need to keep your records for 6 years and in some cases even longer. For example, if your company has purchased something that will last longer than 6 years, like machinery and equipment or the transaction covers more than one accounting period.
Keeping records about the company
As a director of a limited company, you have to keep records of your business, and if they are not kept at your registered office address you must tell Companies House. There is a whole range of company records you need to keep:
- Details about the directors, shareholders and company secretaries
- Details about the results of shareholder votes
- To Whom, how much, and when you have promised to pay back loans
- What payments have been promised if something goes wrong and it’s the companies fault
- Records of when someone buys shares in the company
- Any loans or mortgages secured against your company’s assets
- PSC register, which includes people with more than 25% shares in your company, people who can appoint and remove a majority of directors or someone who can influence or control your company. This still needs to be kept even if there are no people with significant control in your company.
Keeping financial and accounting records
Like your company records, you’ll need to keep a series of financial and accounting records for the annual fillings we discuss in part 4 and in case HMRC carries out a compliance check to avoid getting fined and potentially disqualified as a director. Here are the records you need to keep:
- All the money your company has received with evidence including grants and government support schemes. E.g. COVID-19 support grants, Invoices and till rolls
- All the money that your company has spent with evidence. E.g. receipts and order notes
- All other financial documents like bank statements and correspondence
- A detailed list of assets owned by your company
- Details on debts your company is owed and debts that your company owes
- The total stock that your company owns at the end of the financial year and stock-taking proof of how you worked it out and details of who you brought from and sold to (unless you’re a retail business.
What happens if you don’t keep records?
If you fail to keep your records, you can be fined up to £3000 and be disqualified as a director! So, it’s best to keep all your records in order from the get-go. You can do this yourself, but it might be worth hiring a professional to do this as HMRC can check your records in check to make sure you’re paying the right amount of tax!
In the unfortunate situation where your records are lost, stolen or destroyed, you need to tell your corporation tax office about it straight away. You will then need to do your best to try and produce these records again and make sure you include this information in your company tax return, which we discuss in more detail in part 5 that will be released next week.
It’s vital as a limited company director you keep your records in order and that Companies House knows where they are being stored., It might be worth investing in record-keeping software if you don’t plan to hire a professional to keep your records, just in case they are lost, stolen or destroyed.
Click here to head to part 3 of this blog series which directly links to the records you have to keep as a limited company director as it discusses all the changes that can happen to your business, who to file them with and when.