Month: November 2014

Record keeping for the self-employed

income and expenses files

Record keeping is an essential part of running a small business. In part one of my blog I will be looking at why you need to maintain records and what records you are required to retain. Part two, next week will look at the different ways to record you income and expenditure.

A legal requirement

As a self-employed individual you are responsible for filing a tax return. Maintaining the records and documents used to support the numbers in the return is a legal requirement. You may have to pay a penalty if you don’t keep records of if you don’t keep records for long enough.

How long do I have to retain my records for?

You need to retain invoices and receipts for 6 years from the end of the tax year.

Records you are required to keep

Your business records must include records of all your sales, purchases and expenses. Examples of the records that you are required to maintain include: till rolls, bank statements, paying-in slips, customer invoices, accounting records, purchase invoices, cheque book stubs, credit card statements and mileage records. If you are claiming capital allowances for certain assets you will need to maintain certain records to support the claim you make.

You can scan and store the records electronically or you can keep the originals. Write on the receipts how you paid (cash, debit or credit card etc) to make it easier for you to reconcile everything later on.

Above all, keep your records (paper or digital) well organised by year, quarter and month.

Financial management

The above requirements may seem quite onerous but on the plus side if you maintain accurate and up-to-date records you will save time (and money if you have an Accountant) completing your tax return. There is less likelihood of you making an error and consequently you will avoid HMRC penalties. Accurate and up-to-date records will allow you to budget for tax payments and manage your business’s cash-flow effectively.

Do get in touch if you have any questions on the above – 07596 516670 and don’t forget next week’s blog on ways to record your income and expenditure.

Karen Upcraft

The Winchester Bookkeeping Company


Saving tax on the Christmas Party!

xmas parties

The yuletide season will shortly be descending upon us and you may well be starting to think about organising a party to entertain your staff at Christmas time. Read on to discover how you can limit that tax bill….

In the normal course of events when an employer provides entertainment for their staff the employees would be charged on their share of the event. There are however exceptions to this rule.

As an employer if you provide your staff with an annual party then there is no charge to tax on the employee and the cost is fully allowable for corporation tax purposes providing the cost per head does not exceed £150. In addition, ALL members of staff at that location must be invited. Other halves or guests can be included.

You could provide two events with the cost per head of £75 for each event but if you provided two events and the latter one took the total cost per head to above £150 then only the first one would be allowable.

To work out the Cost per head, divide the total cost of the function by the total number of people (including guests).

Any VAT paid can also be reclaimed provided that the conditions outlined above are adhered to.

The rules on what is allowable for tax purposes when entertaining can be complex so if you need any help in interpretation do give me a call 07596 516670,

Karen Upcraft

The Winchester Bookkeeping Company