A limited company keeps two sets of records. One covers trading. The other covers ownership, shares and resolutions.
Both need to be kept for six years. HMRC can fine you £3,000 if proper accounting records are missing. A director can also lose the right to act as a director.
This guide covers what to record, what to do each month and what to have ready at year end.
Quick Answer
Record money in and out, assets, debts and stock. Keep the ownership paperwork too. Reconcile the bank every month. Update the director’s loan account every month. File accounts nine months after year end and the tax return within twelve months.
What Records Must a Limited Company Keep?
Two sets of records. Accounting records cover money received and spent, assets, debts, stock and all goods bought and sold. Company records cover shareholders, votes and resolutions, plus share transactions, debentures, indemnities and secured loans. Keep both for six years from the end of the financial year.
GOV.UK lists both sets under company and accounting records.
Accounting records cover the trading side:
- all money the company received and spent
- assets the company owns
- debts owed by the company and debts owed to the company
- stock held at the financial year end
- all goods bought and sold
- receipts, invoices, bank statements and till rolls behind those figures
Company records cover the ownership side:
- shareholders, plus votes and resolutions
- debentures, meaning promises to repay a loan on a set date
- indemnities the company gives
- transactions where someone buys shares
- loans or mortgages secured on company assets
Sole traders do not deal with the second list. New directors often do not know it exists.
The retention clocks vary by tax and business type. We set out the HMRC record-keeping rules in full.
What Are the Monthly Bookkeeping Tasks?
Six jobs every month. Code the bank feed. Match the bank to your books. Raise and chase sales invoices. Log supplier bills with their due dates. Update the director’s loan account. Then check the profit figure and the debtor list.
Here is the routine as a list:
- Code the bank feed. Give every line a category and a date.
- Match the bank. Tick your records against the statement and explain anything left over.
- Sales invoices. Raise them, send them and log what is owed.
- Supplier bills. Log each bill when it arrives and note the due date.
- Director’s loan account. Record every personal payment in or out.
- Read the numbers. Check the monthly profit and who still owes you money.
Task two catches the errors the other five create. Duplicates, wrong coding and missing sales often show up there. We explain how bank reconciliation works step by step.
Task five is the one directors skip. It is also the one that costs the most when it goes wrong.
How Do You Track a Director’s Loan Account?
Log every payment between you and the company. Salary, dividends and expense refunds do not count. Company money spent on personal items goes on one side. Your own money put in goes on the other. The running balance sits on the balance sheet at year end.
A director’s loan account is just a record with two columns until nobody keeps it up.
Two figures make it matter.
The 33.75% charge. If you owe the company money and repay it within nine months, you avoid the charge. The clock starts at the end of the accounting period. Miss it and the company pays Corporation Tax at 33.75%. GOV.UK sets out the director’s loan rules in full. The company can reclaim that tax later, but the cash goes out now.
The £10,000 line. If you owe the company more than £10,000 at any point in the year, that counts as a benefit in kind. The company deducts National Insurance. You report it on your own return.
Both figures depend on a balance you can only know if you track it monthly. If you wait until year end and rebuild it from bank statements, you will usually find more than the director expected.
Keep it clean with three habits. Use the business card for business only. Record any personal spend the same week. Repay before the nine month mark, not after.
How Does VAT Bookkeeping Work in a Limited Company?
VAT registration adds a quarterly return and a stricter set of records. You record everything bought and sold, including zero rated, reduced rate and exempt items. You also keep a VAT account. Some records must be digital under Making Tax Digital.
GOV.UK covers this under keeping VAT records. Your VAT account shows four figures:
- total VAT on sales
- total VAT on what you buy
- VAT you owe HMRC
- VAT you can reclaim
Keep VAT records for at least six years. That matches the accounting records clock, which makes life easier.
The practical rule is simple. Match the bank before every return. A return built from unmatched books can be wrong in either direction.
Watch the coding on three things in particular. Entertainment, fuel and anything bought partly for personal use.
What Do You Need for Year End Accounts?
A clean bank match to the final day. A stock count if you hold stock. A debtor and creditor list. Your director’s loan balance. Fixed asset purchases with invoices. Then the paperwork behind anything unusual, so your accountant is not guessing.
Deadlines set the pace. GOV.UK lists the filing deadlines for a private company:
| Item | Deadline |
|---|---|
| First annual accounts | 21 months after registration |
| Annual accounts after that | 9 months after the financial year end |
| Corporation Tax payment | 9 months and 1 day after the accounting period ends |
| Company Tax Return | 12 months after the accounting period ends |
Note the order. You pay the tax before you file the return. That surprises most first time directors.
Here is the year end pack your accountant wants:
- bank statements to the last day of the year
- a bank match with no unexplained items
- stock value at the year end date
- a list of unpaid sales invoices
- a list of unpaid supplier bills
- the director’s loan account balance
- invoices for anything you bought as a fixed asset
- loan and finance agreements
You get most of this as a by product of a monthly bookkeeping service. Companies that leave it to year end pay for the catch up instead.
What Software Suits a Limited Company?
Any cloud package that handles double entry, VAT and bank feeds will do the job. Companies need a balance sheet, so a simple cash book is not enough. Pick one your accountant already works in. A shared login saves more time than any feature comparison.
Statutory accounts include a balance sheet. Single entry records cannot produce one, which rules out a basic spreadsheet for most companies.
Beyond that, the differences are smaller than the marketing suggests. Most mainstream UK packages handle bank feeds, VAT returns and reports.
Two practical points decide it. Does your accountant use it every day? Can you give the director’s loan account its own nominal code?
Starting the Routine
Open a business bank account first if you have not. Company money and personal money have to stay separate. A director’s loan account cannot work without that split.
Then pick one day each month. Same day, every month, no exceptions.
Track the loan account from day one. Rebuilding it two years later is the most expensive tidy up we see.
DASA’s monthly bookkeeping service covers the coding and the bank matching. We also handle the VAT figures and the year end pack. Tell us your year end date and whether you are VAT registered. Get a quote and we will send you our current pricing.
This article gives general information about limited company bookkeeping in the UK. It is not financial, tax or legal advice. Every company is different. Speak to a qualified accountant about your own situation.
Frequently Asked Questions
What bookkeeping records must a limited company keep?
Two sets. Accounting records cover money received and spent, assets, debts, stock at year end and all goods bought and sold. Company records cover shareholders, votes and resolutions, share transactions, debentures and secured loans. Keep both six years.
What are the monthly bookkeeping tasks for a limited company?
Code the bank feed, match the bank against your books, raise and chase sales invoices, log supplier bills with due dates, update the director’s loan account, then check the profit figure and the debtor list.
How do you record a director’s loan account?
Log every payment between you and the company that is not salary, dividend or an expense refund. Company money spent personally goes on one side. Your own money put in goes on the other. The balance appears on the balance sheet.
What happens if a director’s loan isn’t repaid in 9 months?
The company pays Corporation Tax at 33.75% of the outstanding amount. That tax can be reclaimed later, but the cash goes out now. Owing more than £10,000 at any point also counts as a benefit in kind.
When are limited company accounts due?
Annual accounts are due nine months after the financial year end, or 21 months after registration for first accounts. Corporation Tax is due nine months and one day after the accounting period ends. The Company Tax Return is due within twelve months.