Setting up your accounting records

Setting up your accounting records

You have a legal responsibility to keep proper accounting records.

Put simply, any income you receive or any practice expense that you incur should be recorded and it is important that you keep evidence of the particular transaction, normally in the form of an invoice.

For your record of income, most chambers provide their members with a schedule of fees received. You should always reconcile this schedule to your bank statements to ensure that you have banked all your receipts. This schedule can then be used as the basis for your VAT returns and for the preparation of your annual accounts.

There are several ways in which you may choose to record your payments. You could use a printed analysis book, spreadsheets, or any other accounting software package. The key is to keep your records as simple as possible.

The accounting software we would recommend is Xero. It is simple to operate, helps you with your VAT returns, and saves our time when we prepare your annual accounts. We provide this software free to Cassons clients under our licence. If you require further information, please speak to a member of our Bar Department.

If you prefer to maintain a simple payments analysis schedule, you can either keep it on a manual basis or use the model that we have created. You can download this Microsoft Excel 2003 spreadsheet by clicking here. If, after downloading the model, you require further guidance then please speak to us.

Most chambers will give you a monthly aged debt report. There is strictly no need to retain every aged debt report. If, however, you intend to raise finance to support your practice you should keep recent reports. This will help you to demonstrate to the bank the level of fees outstanding, which will influence the manager’s decision.

You may prefer to pass over to us the responsibility of maintaining your records and preparing your VAT return. If you do, we can give you a quote for dealing with this.

To comply with your legal responsibilities, you should retain your records for several years. There are different and complicated requirements for VAT and income tax. As a rule of thumb, we recommend that you keep your records for seven years after the end of your accounting period.

This answer was last checked May 2017. This answer is for general guidance only. It provides an outline, and may not include points which are important in your case. You should not rely on this answer without taking individual advice based on the full facts of your case. The information given was correct at the time of release.