Preparing for Your Annual Accounts

3. Accounting Records

There is a legal requirement to keep detailed accounting records for the company. The exact requirements will depend on the size and complexity of the business.

3.1 For the very smallest company, the absolute minimum accounting records would be:

• Bank statements, cheque books and paying-in books.
• Original invoices for all purchases and copy invoices for sales.
• PAYE records, even if the only employees are directors.
• VAT records if you are registered, including reconciliations of the amounts paid.
• Stock or uncompleted work at year end.
• A schedule of fixed assets.

3.2 For businesses which are slightly larger, but nevertheless still use a manual book-keeping system and buy or sell on credit, additional records might include three ledgers:

• Sales Ledger (or Sales Day Book).
• Purchase Ledger (or Purchases Day Book).
• Nominal Ledger.