Small Business What Records Do I Have To Keep?

What records practice small business organisation owners need to go on?

There are plenty of upsides to being your own dominate, but many pocket-size business owners are daunted by the financial paperwork involved in going it lone. If you've become cocky-employed and are wondering what sort of records you need to keep - and how long you demand to keep them for - our guide volition walk you through the basics.

Why continue business records?

You might remember of record-keeping as a job, just it's crucial for keeping tabs on the coin flowing in and out of your business. Having well-organised records will also brand life easier when you come to file your almanac Self Assessment tax return to HMRC.

Aside from anything else, it's a legal requirement to maintain accurate business organisation records, and you'll need to concur on to them for several years in case HMRC ever asks to audit them. You could be fined up to £3,000 if you fail to keep adequate records.

Records for sole traders and partnerships

If y'all're self-employed every bit a sole trader or a partner in a partnership, so you have to keep records of your business concern income and expenditure. Yous'll likewise need records of any other personal income in order to complete your tax render.

Concern income

You'll need to tape all sales and other business organization receipts and keep supporting records such as invoices and banking company statements. These can exist paper copies or electronic versions, stored either on your computer or online using deject accounting software such every bit FreeAgent.

To comply with HMRC'due south rules, each invoice must take a unique number, along with the date of the invoice and the name and address of both your business and the customer. Each invoice must also include a description of what you lot're charging for, the date the goods or service were provided, the amount being charged and the total amount owed.

If your concern is VAT registered, the invoice must show boosted information, including the VAT amount, your VAT registration number and the rate of VAT charged per item. Encounter our guide to VAT invoices for more details.

Business expenditure

Yous should keep receipts for all your business expenses. These tin can be newspaper receipts or, in most cases, electronic copies such every bit scanned images or digital photos, provided they show all the information clearly. Similarly, yous should also continue records of the purchases of whatever capital avails.

Recording expenses in FreeAgent

FreeAgent makes information technology easy to keep records of all the expenses you lot incur while running your business organisation. If you lot apply the FreeAgent mobile app, you can snap expense receipts while you lot're on the go and upload them straight to your account from your phone.

Notice out more about expenses in FreeAgent

Other business records

If your business is registered for VAT, there are some boosted records you'll need to keep. If your business organisation employs anyone else, you'll need to continue PAYE records. Y'all'll also need to keep details of any grants you claimed through the Self-Employment Income Support Scheme (SEISS) during the coronavirus (Covid-19) pandemic.

Personal income

You'll need to go along records of whatsoever income you've received exterior of your business organisation in gild to consummate the personal parts of your revenue enhancement return. Depending on your circumstances, these records could include:

any P45s, P60s and P11Ds and payslips from employment (if you had a full-time or part-time job on elevation of any work you lot did for yourself during the tax year, for example)
personal bank and edifice society statements showing interest received
original physical copies of dividend vouchers for any UK visitor dividends you were paid

Run into HMRC's guidance for more than details of all the personal pay and tax records you need to go along.

Records for limited companies

The rules on record-keeping are different if your business organization is prepare up equally a express company. There are certain records that yous have to keep about the company itself, as well every bit financial and accounting records. You'll find more details in our guide to setting up a express company, and you lot should refer to HMRC'south guidance on visitor and accounting records.

How long to go along your business records

Sole traders and partnerships must keep business records for at to the lowest degree 5 years subsequently the 31st January taxation return submission deadline of the relevant revenue enhancement twelvemonth. For example, the tax return for the 2022-20 revenue enhancement year was due by 31st Jan 2022, so y'all would need to continue records relating to that revenue enhancement year until at least the cease of January 2026.

Limited companies must keep records for at least half dozen years from the end of the last company financial twelvemonth they relate to.

If your business is registered for VAT, you must keep your VAT records for at least six years.

For more information on the topic of tape-keeping, see HMRC'south online guidance. For some detailed examples, refer to the downloadable guide to keeping records for your revenue enhancement render.

Disclaimer: The content included in this guide is based on our understanding of tax police at the fourth dimension of publication. Information technology may be subject area to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax police force and should seek independent advice if you crave farther data about the content included in this guide. If you don't have an accountant, have a look at our directory to find a FreeAgent Practice Partner based in your local area.