What Business Records Should You Keep If You’re Self-Employed

If you are self-employed, you’ll need to keep business records in case HMRC ever ask you to back up the numbers you enter on your tax return, to use as evidence for expenses you’ve claimed and to demonstrate that haven’t omitted any income.

Business records are the first part of accounting for your small business. They are what as known as ‘source records’ containing all the information you need to do your bookkeeping and to prepare your accounts. For that reason, you must keep hold of them, not just for HMRC, but so your accounts are accurate.

[This is part of the Understanding Self Employment Series]

What Business Records Must You Keep

The records you keep hold of will vary from business to business, but in general most will need to keep some or all of the following:

  • Bank statements
  • Sales Invoices
  • Supplier invoices
  • Cash expense forms & receipts
  • VAT records if you are VAT registered
  • PAYE records if you employ people
  • Business credit card statements & receipts
  • Mileage claims
  • Statements detailing your online earnings like eBay Statements, Paypal account and Etsy income
  • SEISS grant details

You’ll also need to keep additional evidence for anything sections that you fill out as part of doing your tax return such as payslips with your tax code, details of capital gains, rental income or dividends.

How to Store Your Records

The easiest way to store your business records is to keep them digitally using something like Dropbox and google drive – just make sure that wherever system you choose to store them, they are safely backed up. HMRC won’t cut you much slack for failing to file a tax return because you lost your records.

I use Google Drive because it’s included as part of my G Suite subscription and has an option to take a photo within the app, which means your receipts are automatically snapped and saved in your drive. It’s beneficial when I am out and about because I don’t need to carry receipts around until I get home. I can also save invoices that are emailed to me straight to my google drive on my laptop.

When it comes to setting up a file structure for saving your business records, there isn’t any right or wrong way to do it. And you may need to do a little trial and error to find the right solution for you. But here is how I save my records in google drive:

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Keeping Business Records

How Long Must You Keep Your Business Records

HMRC requires that you must keep your ALL your business records, including your business receipts, for at least 5 years after the 31 January submission deadline of the relevant tax year. That means you’ll need to keep your records to support your 2020/2021 tax return until 31 January 2026.

[This is part of the Understanding Self Employment Series]

About Anita Forrest

Anita Forrest is a Chartered Accountant, spreadsheet geek, money nerd and creator of www.goselfemployed.co - the UK small business finance blog for the self-employed community. Here she shares simple, straight-forward guides to make self-employment topics like taxes, bookkeeping and banking easy to understand.