Unless you are an experienced bookkeeper your should consult your accountant about setting up the most appropriate system for your business so that you and they get the best information out of it for you. An hour or two spent with an accountant when setting up a new business will ensure that you receive the best possible advice on your accounting systems. You may wish to “out-source” some bookkeeping functions, but the golden rule has to be, the more you do for yourself the less accounting fees you’ll incur later. You’ll need to strike a balance between what you can reasonably expect to do (banking, petty cash, tills etc) and what needs to be handled by “the experts” (tax, VAT, payroll etc) that allows you to devote sufficient time to running and promoting your pub.
Pubs, no matter whether they are tenancies or freehouses are, in some respects, just like any other business and whatever your business, you must keep accurate records of your income & expenditure, receipts & payments and assets & liabilities. Once you’ve created these records if you’re a sole trader you’ll need to keep self-employment records for five years and if your pub business is in the form of a limited company or partnership keep your records for six years; after the latest date your tax return is due.
Keeping business records, however, is not just about keeping the Her Majesty’s Revenue & Customs (HMRC) happy, a good, up to date record keeping system will help you:
- Keep track of your income & expenses and thus, your profitability
- Ask for a bank loan or credit if you need to
- See quickly what you are owed by others and how much you owe them
- Save time and accountancy costs
- Pay the correct amount of tax
- Receive the correct amount of benefits or credits
- Avoid paying any extra tax or penalties
Records you need to keep
The records you keep will depend on the nature of your business and the different taxes that you have to pay (income/corporation tax), collect (Machine Game Duty/PAYE) or charge (VAT). Detailed below are the most commonly required records and documents. The HMRC website also gives guidance
Sole traders and partnerships
If you are self-employed you must keep financial records such as accounts, proof of any tax paid and records relating to your income & expenses. You’ll need these to complete your various tax returns or to answer any questions from HMRC about the returns you complete and submit to HMRC. You’ll also need to keep your business records separate from your personal records and have a business bank account for your business.
Basic business records must include:
- A record of all sales & takings
- A record of all purchases & expenses
From these basic business records a profit and loss account can be created which shows all income you have received less any expenses you have paid to show what profit (or loss) you make. As all pub businesses are different there are many types of detailed records you may also need to keep, some examples are:
- Cash book and Petty cash book (pubs handle a lot more cash than some other types of business
- Sales & purchase ledgers (where you record your takings and all the things you buy for your pub that isn’t covered by petty cash)
- Wages records
- Invoices & receipts issued and received (till rolls and bills to customers for private parties in function room and payments taken, for instance)
- Stock records (stock take reports, order books, waste and ullage books)
- Bank statements, cheque books, paying in books
See my separate articles on stocktaking, stock management and profit & loss accounts.
Allowable expenses
Tax law allows both individuals and companies to claim “allowable expenses” they can claim for in respect of their personal and business affairs, here are some examples:
Direct Costs (including wages): purchases and goods for resale (food and drinks etc) and wages & salaries.
Premises Costs: office equipment, fixtures & fittings, rent, rates, insurances, repairs, maintenance and renewals, utilities.
Motor Expenses: road tax, insurance, fuel, break-down cover, spares, repairs, servicing, tyres, parking, car & van hire or purchase of new motor vehicles. As vehicles can be used for both business and personal travel it’s necessary to keep detailed records of both business & personal mileage each accounting period so that only the business use of motor expenses are claimed.
Top Tip – There is one travel expense pubs often have to claim for, late night taxis for staff, so having an account with a local firm is the perfect way to keep track of expenses and payments.
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