Self employment

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


Who needs to complete a tax return?

self assessment forms

The  deadline for online self-assessment is round the corner and with all the talk about tax returns I have found it interesting, listening to people’s views regarding the completion of them. Just to clarify some of the misunderstanding surrounding who needs to complete one I have summarised below the most common reasons for needing to complete a tax return.

1. You are a self-employed sole trader or a partner in a business partnership

You will need to complete a return even if your profit is under the personal allowance, if you make a loss or if it’s your final year of trading.

2. You are a company director

3. Your annual income is £100,000 or more -you may have higher or additional tax to pay that hasn’t been collected through your tax code.

4. You have income from savings, investments or property

If you receive £10k or more from your taxed savings/investments and £2.5k or more from untaxed savings.

If you receive £10k or more from property(before deducting allowable expenses) and £2.5k or more from property (after deducting your allowable expenses)

5. If you are employed and want to claim expenses of £2.5k or more

6. You or your partner receive child benefit and your income is over £50,000

7. You have Capital Gains Tax to pay e.g you have sold, given away or otherwise disposed of an asset such as a holiday home or shares.

The key point is that you will need to complete a tax return even if you don’t have to pay any tax or you’ve already paid it.

If you are not sure whether you need to fill in a tax return you can use the very useful toolkit on the following link:

If you would like to chat about any of the above or need assistance in completing your return please get in touch to organise a free no obligations meeting.