Business Stationery & Accounting Records
The minimum requirements are listed below:
A sole trader's or partnership's stationery must include:
- the business address;
- the names of the partners or proprietor. If there are a lot of partners, an address where the list of partners can be viewed is sufficient.
A limited company's stationery must state:
- the business and registered name of the company;
- the registered office and business address. These may be different;
- the company registration number and country of registration.
It is not necessary to name the directors on the stationery, but if they are to be included, everyone must be listed.
VAT-registered businesses must show their VAT number on all sales invoices and credit notes.
These are necessary not only to record all of the accounting transactions, but also to monitor the performance. From these, VAT returns and annual accounts will have to be prepared. Limited companies must keep accounting records that comply with the 1985 Companies Act. Sole proprietors and partnerships have to keep sufficient accounting records to comply with tax legislation.
The following must be recorded in the books:
- all monies received, with details of the payer and what it was for;
- all monies paid out, with details of the payee and what it was for;
- all sales and purchases of the business;
- all assets and liabilities of the business.
The accounting system adopted will depend upon the sophistication of the business. Retail businesses would be best suited to a pre-printed weekly trader?s cashbook. Small service-based businesses can use a book recording receipts and payments with additional information where necessary. For larger, more complicated, businesses, a more sophisticated accounting system will be required which may include daybooks and ledgers. Quite often, these type of systems will be computerised. Basic accounting records can also be kept on spreadsheets. You will need to consult with an accountant to find out the type of bookkeeping system that will be required.
Pay As You Earn (PAYE)
If the business employs people, wages records will need to be maintained. This will mean a lot of form filling and also the learning of how to operate the PAYE system. You may have to pay someone - such as your accountant - to calculate the wages or else purchase a computerised payroll system. Some people try to avoid the complexities of PAYE by telling staff 'to look after your own tax affairs'. This will probably result in an Inland Revenue investigation and a large tax demand, which could put you out of business. In addition, if you are paying people as 'casual labour', you could find yourself in trouble. There is no such thing as 'casual labour' unless the rules laid down in the Employers' Guide to PAYE are strictly adhered to. Whatever course you decide to follow, you should seek professional advice from an accountant. Payment of employees' PAYE and National Insurance (NI) is normally made by the 19th of the month following payment of the wages.
Value Added Tax (VAT)
This tax has very complicated rules which, if not adhered to, could prove to be costly to you. VAT-registered persons charge VAT on certain goods and services. As a business, you will be expected to act as the Customs and Excise's collection department and to send in returns together with any monies owed. Returns are normally sent in quarterly. You are not paid for carrying out this task and, if you do not comply with the VAT legislation there, can be stiff penalties.
If you make or provide taxable supplies or services, you will have to register for VAT if your turnover goes above the VAT threshold within the last twelve months. If you fail to register within the time allowed, there are heavy penalties.
Your accounting records will have to be adapted to account for VAT. The Customs and Excise aim to visit registered traders within three years of registration. VAT is payable once an invoice has been issued, not when the payment is received, but for businesses with lower turnovers, VAT can be accounted for when the payment is received.
The following points should be borne in mind:
- All invoices and credit notes issued should state your VAT number.
- VAT cannot be reclaimed on a supply unless supported by an invoice giving the supplier's VAT number and a description of the goods or services.
- There are special rules for VAT on cars and their running costs.
- A surcharge arises if VAT returns or payments are submitted late.
- There are penalties for incorrect returns.
- In certain areas, VAT laws can be very complex, such as in the printing industry.
The question of whether VAT registration is necessary or advisable is one that needs careful consideration before commencing in business. It could mean the difference between success and failure. You register for VAT on Form VAT1, which is available from the local VAT office.