Businesses need to know how well they are doing, whether they are making or losing money, what money they have in hand, and what money is owed to them and by them. If up-to-date records are kept, they will have a reasonable idea of their company’s financial health. Businesses need to show the taxman, bank manager and any investors how their finances stand within the company. Businesses are required by law to keep to all the documents – bills and receipts – which form the basis of information on their tax return for six years. This includes petty cash records, bank counterfoils, and goods in and out records. Businesses need to know their turnover, precisely. For instance, if they turnover more than a certain amount in any twelve-month period, they are obliged by law to register for VAT purposes within 30 days of crossing this threshold. Failure to comply can result in heavy penalties.
