If you are a sole trader or partner in a business partnership, then you must keep self-employed business records. These business records will include your business income and expenses for your tax return if you are self-employed. You will also need to keep records of your personal income. If you are the nominated partner in a partnership, you must also keep records for the partnership.
When keeping your self-employed business records, you will also need to choose an accounting method; Traditional accounting or Cash basis accounting. Traditional accounting where you record income and expenses by the date you invoiced. Cash basis accounting is when you only record income or expenses when you receive money or pay a bill. With this method, it means you will not need to pay income tax on money you have not yet received in your accounting period.
What self-employed business records to keep?
When you are self-employed, you will need to keep records of:
- all sales and income
- all business expenses
- VAT records if you are registered for VAT
- PAYE records if you employ people
- records about your personal income
- your grants, if you claimed through the self-employment income support scheme
When you are self-employed, you do not need to send your records in when you submit your tax return but you need to keep them so you can work out your profit or loss for your tax return and show them to HMRC if required. Therefore, it is essential to make sure your records are accurate.
What proof do I need to keep?
You will need to keep proof of these records in the form of all receipts for goods and stock, bank statements, sales invoices, bank slips, till rolls etc.
With all of these records, you must keep your self-employed business records for at least five years after the 31 January submission deadline of the relevant tax year. HMRC may check your records to make sure you are paying the right amount of tax.
If you would like to find out how we can support you with your self-employed business records then please get in touch.