Whether you’re self-employed or in a partnership, you need to keep adequate records and business storage can help keep everything organised. Business owners often focus primarily on building their companies, which is not a bad thing, but they tend to forget the importance of storing files.
Safe and accessible business storage has become an essential part of the process and we are not talking about storing files in lofts or garages. Documents need a safe place without taking up too much space at home or the office and that brings us to business storage units.
With so much vital documentation, having sufficient storage space and a logical filing system becomes quintessential. While digital storage is always an option, you must be able to access everything even after upgrading your computer or software.
Why Should Businesses Keep Financial Records?
Businesses must keep financial records to meet the Companies Act regulations and tax regulations. If a company fails to meet business record-keeping requirements, the person responsible could be disqualified.
In some cases, directors of limited companies are also employees and that means they need to complete a self-assessment tax return and keep those related records correctly as well. If you don’t keep accurate records, you could risk underpaying or overpaying on tax.
Keeping clear and up-to-date records also play a vital role if you want to be acquired by another firm. According to Catherine Livingstone, director at chartered accountants Wylie & Bisset: “As well as ticking all of the tax and legal boxes, up to date and accurate financial records show the position of a business at any time. This means that directors have the financial information they need to make better management decisions.”
Penalties For Not Keeping Business Records
Failure to keep proper records could result in the HMRC charging you with a penalty of up to £3,000 per tax year. In many cases, when HMRC determines failed record keeping, it’s associated with an under-declaration of profit.
HMRC will more than likely charge penalties and interest on late payments of any additional tax and National Insurance contributions. Worst case scenario if no business records are kept at all, there could be a penalty for failing to keep records over and above any other penalties HMRC may apply.
If you are at risk of being charged a penalty by HMRC, it may be time to speak to a professional adviser. You could meet with a Chartered Tax Adviser or someone from the tax charity, TaxAid, who will provide free tax advice to anyone with a lower income.
How Long Should I Keep Tax Documents For?
While the primary focus may be on storing the latest documents, there are many rules and regulations for historic documentation. Most business documents should be kept for six to seven years as that is deemed long enough to defend tax audits, lawsuits and potential claims. The only documents you really need to keep for 7 years though are tax records.
It’s important to keep copies of your tax returns with all the supporting documents including statements and receipts. Store these safely in boxes or envelopes with the tax year clearly marked. If you need more information on archive storage for tax documents, visit the HMRC website.
Other Documents Destined For Business Storage
Not all documents need to be kept for long periods of time and that includes credit card bills, bank statements, receipts, insurance policies and monthly or quarterly investment statements. These you can discard within a year except when a credit card bill has a warranty.
Health and safety records keep track of all injuries at the workplace except in companies with less than five employees. Companies where employees are exposed to noise, vibration or fumes are required to keep their health surveillance records for 40 years. The Health and Safety Executive (HSE) can provide you with more information about this.
Employee files should be kept for at least seven years after someone leaves, is terminated or retires. However, in cases where an employee suffers a work-related accident or files a claim, you should retain your records for up to 10 years after the claim has been resolved.
What Documents Should You Always Keep?
For businesses, ownership records should be kept forever and this refers to business formation documents, annual meeting minutes, company by-laws, stock ledgers and property deeds. Other personal and business documents you should keep forever include the following:
- birth certificates
- marriage license
- divorce papers
- military discharge papers
- social security
- death certificates
- life insurance policies
- benefit schemes
- estate planning
Business Storage And Recordkeeping
Packing a business storage unit properly is essential if you want everything to run smoothly. Besides packing tips, there is so much else to consider including the facility’s rules and regulations. Once you’ve thoroughly read through and signed the agreement, keep these tips in mind for easy business storage.
- Maximise the height of the unit with additional shelving and tall racks
- Place the more popular items closer to the entrance
- Always put heavier items at the bottom to minimise collapses and possible injury
- For large amounts of stock, invest in inventory management software for easy and accurate stock counts and balancing
- Create a master list of every item in the storage unit so everyone knows where to find everything
- Leave an aisle in the middle so you have better access to all of your stock
- Clearly label everything on multiple sides especially if you have multiple walkways
Storing Files Digitally
Before making a decision, businesses must identify whether or not they need to access and reference documents regularly. If so, digitising those records will help provide clients with fast and efficient service.
Remember, digital storage may be a great idea but it doesn’t come without risk. People lose important documents all the time and for various reasons from failing hard drives, stolen smartphones and laptops, online services shutting down and natural disasters.
To ensure security, you should always keep multiple copies (back-ups) stored in different ways. Besides using a business storage unit, here are some of the best digital storage methods:
- Cloud storage
- External Hard Disk Drives (HDD)
- Solid State Drives (SSD)
- USBFlash Drives (thumb drives)
- CD, DVD and Blu-Ray
Recommended: ‘Best Archive Storage Tips’
Affordable Business Storage Units
At Space Centre Self Storage, we offer FREE insurance up to £3000 without any upfront deposits. If you need more cover, you can use our provider or your own. All of our units are purpose-built for business storage, student storage or household storage.
Prices are guaranteed for 12 months and we don’t tie you to long term contracts. In addition, there is also no charge extra if you need a different unit or extend your rental period. Get in touch with our friendly, experienced staff at our facilities in Bristol, Stroud and Gloucester for more information and to reserve your storage unit.