When you own a limited company in the UK, you need to understand business compliance. It doesn’t matter if you’re the sole director of your company or one of a team, failing to be compliant can lead to legal problems.
While it may seem daunting, business compliance helps protect you, your company and your employees. But it can be difficult to get your head around if you’re just starting up.
One area where business compliance is essential is finance. Even business owners who are good with numbers can find financial compliance confusing. Get it wrong, and you could end up facing problems with HMRC! That’s where using an experienced accountant will help you avoid the pitfalls.
Main areas of business compliance
We’ll look at financial compliance in depth further down the page, as that’s our area of expertise.
But there are other areas of compliance you also need to be aware of. And while we’re not experts in them, you must understand them. These include:
- Employment law and workers’ rights
- Complying with applicable industry regulations, such as the Environment Agency or Financial Conduct Authority
- Health and safety regulations
- Licences, permits and permissions required for your sector
- Contracts and agreements with third parties
- GDPR – General Data Protection Regulation
Understanding financial compliance
Whilst you may know what is in your business bank account and might have an idea of turnover and profitability, that’s just a tiny element of the financial side of running your business. You also need to ensure you meet compliance rules.
We recommend you keep on top of compliance regularly. Waiting to speak to you accountant at the end of your financial year could mean you’re not compliant in some areas. This can result in missing deadlines or opportunities to approach HMRC. Miss them, and you risk being given a penalty.
Many small businesses can’t afford to employ an in-house accountant who understands the very latest compliance regulations and rules. So, choosing one that can help you in the following areas is essential:
- Preparing annual financial statements
- Statutory accounts review
- Business advice throughout the year, not just at year-end
- Cash flow forecasting
- Management accounting and reporting
- Bookkeeping services
- Payroll services
- Cloud technology solutions
- Statutory consolidation support
- iXBRL tagging
- Business tax
As well as helping your business stay compliant, regular reviews will also help your business stay healthy. Regular financial reporting will spot possible issues before they become a serious problem.
What documents does my business need to keep?
Staying compliant means there needs to be a thread of documents that prove you aren’t operating outside the rules. And while it may appear that you need to keep a lot of paperwork, software means most can be stored digitally these days. You don’t need to buy an endless number of filing cabinets!
For financial and tax compliance you need to retain:
- Bank statements
- Expenses details
- Previous tax returns
Other documents you are required to keep include:
- Business law: Companies House information, HMRC papers, tenancy agreements, contracts, data protection documents
- Health and safety: A health and safety policy and risk assessments if you have more than five employees, keep accident reports and display a health and safety regulations poster.
- Employment law: Employments contracts as well as HR, grievance and disciplinary procedures.
How to stay compliant
As you can see, businesses need to keep track of a lot of compliance requirements. Business owners must adopt internal controls to ensure they do not fall foul of any legislation.
Appointing someone internally may work for some compliance, such as ensuring health and safety posters are correctly shown. But when it comes to tax and business finance compliance, we recommend you choose an expert. Ensure your accountant is always on top of the latest compliance that is being issued or you could regret cutting corners.
Speak to our team of accountants in the North East if you would like to know more about how we can help you with compliance.