RECORD KEEPING - SELF EMPLOYED

It’s best to get record keeping right from the start.  It will help you get better control of your business and help ensure you are claiming all the expenses and allowances you are entitled to. Besides, failure to do so can result in penalties from HMRC. What to keep:

• a record of all your sales invoices and takings
• a record of all your purchases invoices and expenses
• business assets you’ve bought (e.g. equipment)
• business assets leased or rented (e.g. lease agreements)
• value of stock at the end of your accounting period
• details of payments to employees (e.g. wages)
• business vehicle and travel costs
• interest from bank or building society accounts
• business liabilities (e.g. bank or credit card loans)
• details of assets sold or disposed of by the business for capital allowance purposes
• other money coming in (e.g. money you invest in your business)
• any other records of personal income (e.g. P60s & P11Ds)

The cash basis & simplified expenses scheme can also be used.  This is designed for businesses with a turnover below the VAT threshold and the records kept will include details of money actually paid & received.  For cars, the business can use a mileage rate instead of claiming running costs.

How long to keep records

Typically this will be 5 years & 10 months after the end of the tax year to which the tax return relate e.g. the tax return & related records for y/e 5.4.2020 will need to be kept until 31.1.2026.

Self-Employed pages ► Self Employed sole traders ■ Registration and National Insurance ■