What Records Does a Limited Company Need to Keep

At Towerstone Accountants we provide specialist limited company accountancy services for directors and owner managed businesses across the UK. We wrote these guides for people running a company who want clear answers on tax, payroll, Companies House duties, and day to day compliance without jargon. Our aim is to help you understand your responsibilities, reduce the risk of penalties, and know when to get professional support.

This is one of those questions that often feels basic on the surface but becomes far more important the longer you run a limited company. In my experience most directors know they need to keep records but are unclear on exactly what that means in practice, how long records must be kept for, and what HMRC or Companies House would actually expect to see if they ever asked questions.

In this article I want to walk you through the records a UK limited company is legally required to keep, why those records matter, how they fit together, and where directors commonly fall short. I will also explain the difference between records you must keep by law and records you should keep for good business management. Everything here is based on real world UK guidance and the situations I see regularly when dealing with limited companies.

By the end you should have a clear picture of what good record keeping looks like and how to avoid problems before they arise.

Why record keeping matters for limited companies

A limited company is a separate legal entity. That single fact drives the entire record keeping requirement.

Records are needed to

• Prove income and expenses
• Support tax returns
• Prepare statutory accounts
• Demonstrate director decisions
• Protect you during HMRC enquiries
• Meet Companies House obligations

Poor records rarely cause immediate problems. Issues usually surface months or years later when something needs explaining and the evidence no longer exists.

Who is responsible for keeping records

The legal responsibility for record keeping sits with the company directors. Even if you use an accountant or bookkeeper the duty does not transfer to them.

If records are missing incomplete or inaccurate it is the director who is accountable not the adviser.

Accounting records a limited company must keep

At the core are the accounting records. These show what the company has earned and spent and what it owns and owes.

By law a limited company must keep records that show

• All money received and spent
• Assets owned by the company
• Liabilities owed by the company
• Stock held at the year end
• Goods bought and sold

In practical terms this means keeping evidence of every transaction.

Sales records and income evidence

A company must keep records of all income earned even if payment has not yet been received.

This includes

• Sales invoices issued
• Till receipts if applicable
• Contracts and agreements
• Bank statements showing receipts
• Online platform sales reports

Income should be recorded when it is earned not just when the cash arrives. This distinction matters for both tax and accounts.

Purchase records and expenses

Every expense claimed by the company must be supported by evidence.

Typical records include

• Supplier invoices
• Receipts for small purchases
• Contracts for ongoing services
• Mileage logs
• Bank and credit card statements

Without evidence an expense may be disallowed for tax which increases the Corporation Tax bill.

Bank statements and reconciliations

Bank statements are a fundamental part of the records. They provide an independent trail of transactions.

Good practice includes

• Keeping all bank statements
• Reconciling them regularly
• Ensuring every transaction is explained

Unexplained bank movements are a common trigger for HMRC questions.

Cash records if applicable

If your business handles cash you must keep clear cash records.

This includes

• Daily cash takings
• Cash expense records
• Cash paid into the bank

Cash businesses face greater scrutiny so accuracy matters even more.

Payroll records and employee information

If your company employs staff including you as a director you must keep payroll records.

These include

• Employee details
• Pay calculations
• Payslips issued
• PAYE submissions
• P60s and P11Ds where relevant

Payroll records must support what has been reported to HMRC.

VAT records if registered

If the company is VAT registered the record keeping burden increases.

You must keep

• VAT invoices issued and received
• VAT account showing calculations
• Evidence for zero rated and exempt supplies
• Import and export documents if applicable

Digital record keeping rules also apply which means records must be stored electronically and submitted via compatible software.

Director’s Loan Account records

Any money moving between you and the company outside of salary dividends or expenses must be recorded.

This includes

• Money you take out
• Money you put in
• Personal expenses paid by the company
• Expenses paid personally and reclaimed

Clear Director’s Loan Account records help avoid unexpected tax charges later.

Dividend records and paperwork

Dividends must be properly documented.

Records should include

• Dividend vouchers
• Board minutes approving dividends
• Evidence of distributable profits
• Payment records

Missing dividend paperwork is a common issue during HMRC enquiries.

Statutory records a limited company must keep

In addition to accounting records a limited company must keep statutory company records.

These relate to ownership and governance rather than money.

Register of directors and secretaries

You must keep a register showing

• Names and addresses
• Dates of appointment and resignation
• Service addresses

This must match information held at Companies House.

Register of shareholders and shareholdings

This record shows who owns the company and in what proportions.

It should include

• Names and addresses of shareholders
• Number and class of shares held
• Dates shares were issued or transferred

This is critical when dividends are paid or shares are sold.

Register of people with significant control

Companies must keep a register of People with Significant Control.

This records individuals who

• Own more than 25 percent of shares
• Control more than 25 percent of voting rights
• Have significant influence over the company

This information must also be reported to Companies House.

Company resolutions and meeting minutes

Decisions made by directors and shareholders should be recorded.

This includes

• Dividend approvals
• Appointment or resignation of directors
• Share issues
• Major business decisions

Written resolutions and meeting minutes provide evidence that decisions were made properly.

Contracts and legal agreements

A limited company should keep copies of all important contracts.

This includes

• Customer contracts
• Supplier agreements
• Loan agreements
• Lease agreements
• Finance documents

These help explain transactions and obligations shown in the accounts.

Insurance policies and compliance documents

Records should also include

• Insurance certificates
• Health and safety documents
• Licences and permits
• Regulatory correspondence

These are often requested during due diligence or audits.

How long records must be kept

For most limited companies records must be kept for at least six years from the end of the financial year they relate to.

This applies to

• Accounting records
• Payroll records
• VAT records
• Supporting documentation

Some records such as statutory registers should be kept for the life of the company.

What happens if records are missing

Missing or incomplete records can lead to serious consequences.

These may include

• Disallowed expenses
• Higher tax bills
• Penalties and interest
• Extended HMRC enquiries
• Difficulty selling the business

In extreme cases directors can face fines for failing to keep proper records.

What HMRC look for during an enquiry

When HMRC review records they are looking for consistency and credibility rather than perfection.

They focus on

• Gaps in records
• Unexplained transactions
• Poor separation of personal and company spending
• Patterns that do not make commercial sense

Clear organised records shorten enquiries significantly.

Digital versus paper records

Records can be kept digitally or on paper but digital storage is now the norm.

Digital records offer

• Easier retrieval
• Better backups
• Compatibility with accounting software
• Compliance with VAT digital rules

Whatever method you choose records must be legible accessible and complete.

Common record keeping mistakes I see

Over the years the same issues appear repeatedly

• Losing receipts
• Relying only on bank statements
• Mixing personal and company spending
• Missing dividend paperwork
• Not backing up records

These mistakes are rarely deliberate but they create avoidable risk.

How an accountant supports record keeping

An accountant does not just file returns. They help ensure records are complete and compliant.

This includes

• Advising what evidence is needed
• Reviewing records for gaps
• Ensuring compliance with rules set by HM Revenue and Customs
• Preparing statutory accounts
• Supporting you during enquiries

Good record keeping makes the entire process smoother and cheaper.

Practical tips for staying organised

From experience the best systems are simple and consistent.

I usually recommend

• Separate business bank accounts
• Regular bookkeeping rather than year end rushes
• Digital storage with backups
• Monthly reviews of key accounts
• Asking questions early

Small habits make a big difference over time.

Final thoughts from experience

Keeping proper records is not just about compliance. It is about control clarity and confidence.

Directors with good records understand their business better make better decisions and face far less stress when deadlines arrive.

You do not need a complex system but you do need a reliable one. If you are unsure whether your records are adequate it is always better to review them now rather than find out during an HMRC enquiry when options are limited.

From experience good record keeping is one of the most valuable disciplines a limited company director can develop.

You may also find our guidance on What does confirmation statement overdue mean and How do I file my Confirmation Statement each year helpful when exploring related limited company questions. For a broader overview of running and managing a company, you can visit our limited company hub.