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Business records if you're self-employed

4 minute read

If you’re self-employed you must keep business records such as your accounts, evidence of tax that’s been paid and other records relating to your income and outgoings. You’ll need these to help you complete your tax return or to answer any questions from HM Revenue & Customs (HMRC) about a return you’ve completed.

You’ll need to keep your business records separate from and for longer than your personal records. Most businesses find that it helps to have a separate business bank account.

 

If you're self-employed you must keep business records such as your business accounts and records relating to your income. Keeping these records is an essential part of managing your business. You should get into the habit of maintaining your business records as soon as you start to trade.  

You’ll need to keep records of: 

  • All sales and income 
  • All business expenses 
  • VAT records if you’re registered for VAT 
  • PAYE records if you employ people 
  • Records about your personal income 

Why you keep records

You don’t 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 
  • Show them to HM Revenue and Customs (HMRC) if asked 

You must make sure your records are accurate. 

Keep proof

Types of proof include: 

  • All receipts for goods and stock 
  • Bank statements, chequebook stubs 
  • Sales invoices, till rolls and bank slips 

If you’re using traditional accounting

As well as the standard records, you’ll also need to keep further records so that your tax return includes:

 

  • What you’re owed but haven’t received yet 
  • What you’ve committed to spend but haven’t paid out yet, for example you’ve received an invoice but haven’t paid it yet 
  • The value of stock and work in progress at the end of your accounting period 
  • Your year-end bank balances 
  • How much you’ve invested in the business in the year 
  • How much money you’ve taken out for your own use 

How long to keep your records

You must keep your records for at least 5 years after the 31 January submission deadline of the relevant tax year. HM Revenue and Customs (HMRC) may  check your records to make sure you’re paying the right amount of tax. 

 

Source: GOV.UK

Contains public sector information licensed under the Open Government Licence v3.0. 

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