This document discusses the importance of keeping financial and physical records for businesses. It covers why businesses need to keep records, including legal requirements, management efficiency, monitoring performance, and aiding decision making. The document also outlines the different types of records that should be kept, such as financial records like expenses, taxes, invoices and payroll, as well as physical records like purchase orders, licenses and permits. Effective record keeping systems and the advantages of accurate records are also summarized.
2. Learning outcomes
learners will: -
Understand why businesses have to keep records
Be aware of the different types of records
Be aware of the different record formats
3. L3 - Understand how to use financial
and physical record keeping systems
P9 - review financial records for a selected business
P10 - examine physical records for a selected land-
based business
P11 - examine the use of financial and physical records
in monitoring business performance and progress.
M4 - discuss the use and purpose of physical and
financial records, including how they may be used to
monitor business performance and progress.
4. Why do businesses have to keep records?
Working in pairs think about the why businesses
have to keep records.
You have 10 mins to brainstorm this and then feedback
to the class
5. Why do businesses have to keep records?
Legal requirements
Management efficiency
Monitor business performance & progress
Aid decision making
6. Legal requirements
Meet legislative and regulatory requirements
including archival, audit and oversight activities
The law says that everyone who pays tax must keep the
records required to fill in a tax return….this will
illustrate what you have earned and spent
VAT registered businesses are legally required certain
types of business records
7. Management efficiency
Conduct business in an orderly, efficient &
accountable manner
Deliver products/services/customer care in a
consistent and equitable manner
Provide consistency, continuity and productivity in
management and administration
9. Aid decision making
Look at past, current and future data (relating to
production, sales, customers, suppliers,
employees……..)
10. What records should be kept?
Continuing to work in pairs list the different types of
records that should be kept under the headings;
Financial records
Physical records
You have 10 mins to work on this and then will be
required to feedback to the class
11. What records should be kept?
FINANCIAL RECORDS
Business expenses vehicle use log
Credit card statement cash register tapes
Annual tax returns credit card sales receipts
Quarterly tax filings Invoices
Payroll cancelled checks
Inventory check stubs
Sales
Petty cash
12. What records should be kept?
OTHER RECORDS
Purchase orders Licenses
Employment applications trademark regs &
patents
Emails and other business communications
Inventory logs
Personnel records
Accident reports
Articles of incorporation
Permits
13. Computer based records
You can transfer details from paper records onto a
computer, but usually have to keep original.
Don’t have to print everything out, but must make sure
original can be recovered from a computer
Computer packages:
Microsoft Word, Excel, Access, Sage
14. Advantages of keeping accurate
records
Helps you avoid paying too much tax
Avoids interest and penalties by paying right amount
of tax at the right time
Gives you the info needed to manage your business
and help it grow
Makes it easier to get a loan
Helps you budget for tax payments
Helps hmrc to check your tax position accurately
Could help to reduce accountant fees
May support claims to reliefs/capital allowances
15. Steps to effective record keeping;
1. Set up a system – this can be either paper
based/computerised to keep information together
2. Keep records throughout the year – keep all records
and update regularly.
3. Keep records for as long as required –
(6 years for VAT/5 years from the latest day for filing
your self assessment