N°2 · Practice note
The records worth keeping, and the reason they matter later
Record-keeping is usually framed as a compliance chore. Its real value appears years later, when a position has to be explained to someone who was not there.
Every business keeps records because it is required to. The requirement is not the interesting part. What matters is that a decision taken today, such as how an expense was categorised, why an asset was treated as capital, or on what basis a related-party charge was set, may need to be explained several years from now, by someone who has forgotten the circumstances or who was never told them.
Contemporaneous notes beat reconstruction
A short note written at the time a judgement was made is worth more than a detailed reconstruction attempted afterwards. It does not need to be formal: the date, the decision, the reason, and who was involved.
A practical baseline
Regardless of jurisdiction or entity type, these are generally worth retaining in an organised form:
- Bank statements for every account the business uses, including any used occasionally
- Purchase invoices and receipts, matched to the ledger entries they support
- Contracts and variations, including informal amendments confirmed by correspondence
- Asset purchase records, with the basis on which expenditure was treated as capital
- Records of transactions with related parties and the basis of pricing
- Notes explaining any treatment that required a judgement call
Retention periods vary
Statutory retention periods differ by jurisdiction, entity type and record category, and they change. Confirm the periods applicable to you rather than relying on a general figure. Where a matter is under enquiry or dispute, retention obligations may extend well beyond the ordinary period.
General information only. It is not accounting, tax or legal advice and does not take account of your circumstances or jurisdiction.