What Records Does a Limited Company Need to Keep

Running a limited company brings far more responsibility than trading as a sole trader. The moment a company is incorporated it becomes a separate legal entity and that means everything it does must be documented clearly. Companies must keep accurate records not because HMRC enjoys paperwork but because the entire UK corporate system depends on transparency. Good records show who owns the company, who controls it, how money moves, what profits were made, what taxes are due, and whether the business is being run responsibly.

Many new directors assume that record keeping is simply about keeping receipts for tax. In reality it is far broader. A limited company must keep statutory company records for Companies House, accounting and financial records for HMRC, payroll and employment records for staff, tax records for multiple tax types, and operational documents that support the day to day running of the business. These all work together to protect the company and keep it compliant.

In my opinion understanding your record keeping obligations is one of the most powerful things you can do as a director. When records are strong the company runs smoothly, accounts are produced quickly, tax bills are accurate, and year end becomes a simple process instead of a panic. When records are weak everything feels difficult and the company becomes vulnerable to penalties or errors. This guide explains exactly what records a limited company must keep and why each element matters.

The Foundation: Statutory Company Records

Every limited company must keep a core set of statutory records. These relate to the company’s identity, structure, ownership, and internal decision making. They prove to Companies House, HMRC, banks, investors, and regulators that the company is real, well managed, and legally compliant.

Statutory records include details of the company’s registered office, directors, shareholders, share classes, share transfers, voting rights, and key decisions. They also include the Articles of Association and any amendments made over time. These documents paint the official picture of the company and must be accurate because they inform everything from dividend payments to voting rights in a general meeting.

One of the most important statutory records is the register of people with significant control. This register identifies individuals who exercise meaningful influence over the company. It is a legal requirement and Companies House expects it to be updated as soon as changes occur.

These statutory records used to be kept in physical binders but most companies now store them electronically. What matters is that they are accurate and readily accessible because an accountant or auditor may ask to see them at any time.

Accounting Records: The Heart of Company Compliance

Accounting records tell the story of what the company earns, what it spends, what it owns, and what it owes. HMRC requires companies to keep detailed accounting information so that annual accounts and Corporation Tax returns are accurate.

These records include sales invoices, purchase invoices, bank statements, VAT records, ledgers, cashbooks, credit card records, details of assets, loan agreements, and evidence of all financial transactions. Even though I am avoiding lengthy lists it helps to acknowledge that accounting records cover every pound that enters or leaves the company. If the company cannot show where the money came from or where it went HMRC can challenge the accounts or raise assessments.

In my opinion cloud accounting software makes this job far easier because it stores bank transactions automatically, attaches receipts digitally, and creates a full audit trail. Systems like Xero or QuickBooks help directors manage records daily rather than scrambling at year end. HMRC increasingly expects digital record keeping because of Making Tax Digital requirements so using software is becoming essential rather than optional.

The Importance of Payroll and Employment Records

If a company employs staff or pays directors a salary, payroll records must be kept accurately. These records show compliance with PAYE, National Insurance, pension regulations, minimum wage rules, and employment law. HMRC takes payroll very seriously because employees rely on accurate deductions and entitlements. Poor payroll records can lead to costly errors.

Payroll documentation includes employment contracts, right to work evidence, payslips, P60s, P45s, RTI submission receipts, holiday records, sickness records, benefits provided, and pension contribution details. A director might assume that payroll is simple if they are the only employee but even director payroll requires proper records because HMRC can investigate if something does not look correct.

Well kept payroll records protect both the company and its employees. They also support claims for statutory payments such as maternity pay, paternity pay, or sick pay, which require evidence before HMRC reimburses the company.

VAT and Tax Records the Company Must Maintain

VAT is one of the most heavily regulated areas for businesses. If the company is VAT registered it must keep detailed VAT records including invoices showing the correct VAT treatment, VAT account summaries, proof of VAT reclaims, and evidence of whether supplies are standard rated, reduced rated, zero rated, or exempt. HMRC expects the company to maintain digital records under the Making Tax Digital rules which means spreadsheets alone are no longer acceptable unless digitally linked.

Corporation Tax records must also be maintained. These include working papers for tax adjustments, capital allowance claims, research and development evidence where applicable, entertainment expenditure analysis, and proof of any disallowable expenses removed from the profit calculation.

If the company is involved in activities that trigger specific taxes such as Construction Industry Scheme deductions, PAYE settlement agreements, or import duties, these require their own separate records. The tax system builds layers of compliance on top of one another so directors must stay organised to avoid penalties.

Evidence of Assets, Loans, and Major Transactions

A company must also keep records that relate to significant financial commitments. These include loan agreements with banks or directors, HP or finance contracts, lease agreements, asset registers, purchase documentation for high value items, and details of disposals.

The asset register is particularly important because it supports depreciation in the accounts and capital allowance claims for tax. Many companies forget to update their asset register which causes confusion when preparing accounts or filing Corporation Tax returns. A simple spreadsheet or fixed asset module within accounting software keeps everything clear.

Loan agreements are equally important because HMRC can investigate whether a director’s loan has been managed correctly. If the company lends money to a director and the loan is not repaid within nine months of year end the company may owe an additional tax charge. Proper records avoid these surprises.

Keeping Track of Income and Sales Documentation

Sales documentation is essential for proving revenue. This includes invoices issued to customers, receipts for cash sales, contracts, delivery notes, order confirmations, timesheets for service work, and anything that verifies work carried out and money earned.

A company cannot rely solely on bank statements because these do not explain what the income relates to. HMRC expects the company to be able to justify every sale and provide a clear audit trail from the transaction to the accounts.

In my opinion keeping organised sales records not only satisfies HMRC but also helps the company manage credit control. When invoices, statements, and aged debtor reports are clear the company gets paid faster and cash flow improves.

Understanding the Need for Operational Records

Operational records support the business even though they are not strictly financial or statutory. They include internal policies, schedules, contracts, supplier agreements, service level agreements, inventory records, health and safety documentation, quality assurance files, and other materials that show how the business operates.

HMRC may request some of these records if they are relevant to tax. For example inventory records help support stock valuations and revenue recognition. Supplier agreements support claims for allowable expenses. Operational records also help auditors, investors, and lenders understand the business.

Although operational records vary widely between industries they all serve the same purpose. They provide clarity and show that the company is run professionally.

How Long Limited Companies Must Keep Their Records

Company directors are often surprised by how long records must be kept. Statutory company records must be kept for the life of the company. Accounting records must be kept for at least six years from the end of the financial year they relate to. In certain cases such as records relating to assets, VAT MOSS, or suspected tax issues the retention period can be longer.

In my opinion it is far safer to over-retain than under-retain. Storing documents digitally reduces the burden because cloud systems can hold records for decades without physical storage problems. As long as the company maintains backups and secure storage there is no harm in keeping older data.

Why Good Record Keeping Protects Directors Personally

Directors are legally responsible for the company’s records. Poor record keeping can lead to financial penalties, Companies House action, HMRC enquiries, and potential accusations of negligence. In serious cases directors can be disqualified from acting as directors.

Good record keeping protects directors because it shows they acted reasonably, maintained proper oversight, and took their responsibilities seriously. When accounts are filed late or contain material errors HMRC may question whether the director fulfilled their duties. Clear records demonstrate that the company has nothing to hide and that the director is in control.

The Role of Cloud Software in Modern Record Keeping

Cloud accounting and business systems have transformed record keeping for limited companies. Systems like Xero, QuickBooks, Sage, FreeAgent, HubSpot, Dext, and SharePoint make it easier to store records digitally and automate many compliance tasks. They also link bank feeds, upload receipts via mobile apps, and reduce the risk of losing documents.

In my opinion most small companies now benefit more from cloud systems than spreadsheets because they offer consistency, audit trails, reporting, and automation. They also support Making Tax Digital which is becoming universal for VAT and will eventually expand to cover more areas of the tax system.

When Record Keeping Goes Wrong

When a company’s records are poor the consequences are far reaching. Accounts may take months to prepare. Tax returns may be delayed. VAT returns may be incorrect. HMRC may reject claims or open enquiries. Banks may hesitate to lend. Investors may lose confidence. Directors may feel constant stress because they do not know the company’s true financial position.

The good news is that record keeping can be fixed. An accountant can reconstruct old records, organise data, and implement systems that prevent future problems. The key is tackling the issue early rather than waiting for HMRC to force the issue.

Final Thoughts

A limited company must keep a wide range of records covering statutory details, financial activity, payroll, VAT, tax, assets, contracts, and operational processes. These records protect the company, support accurate accounts, and demonstrate compliance to HMRC and Companies House. In my opinion good record keeping is not just about satisfying regulators. It is about running a business with confidence. When records are clear you know where the company stands, what decisions to make next, and how to plan for the future.

Running a limited company means embracing the responsibility of documentation but once systems are in place the process becomes routine. The company becomes more efficient, tax planning becomes easier, and growth becomes far more sustainable.