The Bookkeeping system and recording are the building blocks for your accounts. It is the foundation upon which your accounting system depends, and just like a house will eventually collapse with poor foundations, so will your accounts system.
Statutory returns and submissions
A well maintained Bookkeeping system will enable you to provide all of the statutory returns and submissions accurately and on time, whether its Self Assessment, VAT returns, Annual accounts or CIS returns. Failure to provide accurate information within strict deadlines will result in fines and penalties being incurred.
In addition to forming an essential foundation, under Company Law Directors have a legal obligation to maintain accurate accounts. Failure to do so can lead to fines and ultimately disqualification.
Section 386 of the Companies Act 2006 lays down the duty of every company to keep proper accounts, stating:
“(1) Every company must keep adequate accounting records…
…(3) Accounting records must, in particular, contain—
(a) entries from day to day of all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place, and
(b) a record of the assets and liabilities of the company.
Section 387 makes it clear that failure to comply with this regulation is a criminal offence which is punishable with imprisonment.
(1) If a company fails to comply with any provision of section 386 (duty to keep accounting records), an offence is committed by every officer of the company who is in default…
(3) A person guilty of an offence under this section is liable—
(a) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both)…
The essence of this area of law is that every director of a company is responsible for the company’s accounts. Failure to comply with the law and fulfil this duty can have serious consequences for individual directors. It is therefore important to keep proper accounts, maintaining the books on a daily basis. The act also furthers this duty by requiring these accounts to be kept for a number of years.
For many SME’s and sole traders this is an onerous and time consuming task and takes valuable time that can be better spent developing the business. Dragon Accounting Services can carry out all of your Book Keeping tasks at a very competitive cost.
Contact Dragon Accounting Services in Swansea to set up an initial free meeting to discuss your business and individual requirements.