Industry sector: Leisure

Night club: Record Keeping

Why record-keeping is important

It is essential that you keep very good records of all your business transactions. This is important for several reasons:

  • HM Revenue & Customs (HMRC) requires you to keep certain records for inspection for six years and may check your records from time to time as part of their compliance procedures. There is an HMRC guide to business record keeping for the self-employed on the website. The guide explains which records you have to keep, how long you have to keep them, and what to do if they get lost or destroyed
  • if HMRC decides to investigate the business it will be of real assistance to your accountant if you have kept good records, not only of your sales and purchases, but also of discounts and promotions, drinks and other wastage, theft and other losses because these will affect the overall gross profit rate that your business will achieve. HMRC will look critically at your trading results to see if your gross profit rate is in line with industry benchmarks
  • you need to know how the business is doing at any time - well kept records will tell you
  • if you have any gaming machines that are subject to Machine Games Duty (MGD) - most are - you'll need to register for MGD and keep certain records
  • to keep track of amounts owing from any account customers
  • to know when you need to re-order your stock of drinks and food
  • the conditions of your licence may require you to keep a log book of safety inspections carried out
  • you need to be sure that untrustworthy staff are not stealing from you. Be especially careful if you are not able to supervise staff on a day-to-day basis

Make sure that you note down all income the business receives, and all the money that is spent, even if it is only small amounts. You should be able to show from your records how all income received by the business can be traced through until it is either spent or banked. Ask yourself if you would be satisfied that the records would reveal any dishonesty if they were written up by an employee.

If you take any goods from the business for your own personal use you should keep a record of these.

Your accountant will be able to give you advice on how best to keep records. You might decide to go for a computerised system, which will help your accountant to draw up your accounts at the end of the year. Don't forget that under HMRC's Making Tax Digital (MTD) initiative you'll need to keep your VAT records digitally if your taxable turnover is above the VAT registration threshold. You can find out more about MTD on the website.