When dealing with patients, doctors are all used to keeping copious notes, but when it comes to the financial paperwork, they can often be lacking. In many cases, financial arrangements can work themselves out, but if things go wrong, you can quickly be into a costly situation.
Partner, Ian Tongue looks at the areas where keeping adequate paperwork is essential in the commercial world.
Accounting records can take many forms and in recent years there has been a push to use digital packages and store records electronically.
There is nothing wrong with manual records, but changes to the tax system known as ‘Making Tax Digital’ will largely force businesses into keeping electronic records, as more frequent reporting of information will be required.
HM Revenue and Customs (HMRC) requires you to keep ‘adequate’ accounting records, but does not specify exactly what that means. From a practical perspective, this means that your records allow you to disclose a complete and accurate position of the business.
As a minimum, your system must record:
- Income earned;
- Income received;
- Bad debts.
A private practice should always be run through a separate bank account. For those that are VAT-registered, a higher standard of record-keeping is required.