Record keeping if you're working for yourself

​Why you need to keep records

Keeping up-to-date and accurate records from the date you start your business is essential because:

• it is​ legally required
• it makes it quicker and easier for you, or your accountant, to complete your year-end accounts
• your return of income will be accurate
• you can keep track of all your expenditure

Records that you must keep

Every business must keep a record of:

• all your sales and takings
• all your purchases and expenses
• any money taken out of the business for personal use

Depending on the nature of your business you may also have to keep the following records: 

• invoices
• receipts for purchases
• electronic records of sales or till rolls
• details of items not rung through the till
• cash book
• petty cash book
• sales and purchase ledger
• bank statements
• cheque stubs
• paying-in slips
• stock inventories
• mileage records

You should also keep a detailed record of any 'plant or machinery' for business use that you buy or sell. 

These items are treated as capital for tax purposes and you may be able to claim capital allowances separately in your accounts.

​An example would be a company van purchased for the business. We would allow you to reclaim the cost over the life of the item.

Items that are for both business and personal use

The income tax law says that 'any disbursements or expenses, not being money wholly and exclusively laid out or expended for the purposes of the trade or profession' are not allowable.

However, we do recognise that there are some items, such as vehicles or phones, which may be used for both business and private use. You should therefore keep a record of the extent that the item is used for both purposes. This can then be noted in the accounts and we would look to allow the 'business use' element.

Retention of records and backup data 

You must keep your business records for at least 6 years beginning after the end of the year of assessment that the return is for. 

Keep any paper records in a safe environment​ to reduce any risk of damage or loss. 

If you use a computer, keep a regular backup.