What records to keep
You’ll need to keep records of:
• All sales and Income
Raise sequentially numbered, dated invoices either manually or an invoicing App, Wave Invoicing App is free to download and to use.
Or simply use a Duplicate Invoice Book.
Don’t worry about having to go digital, we at Fuller Accounting do that for you.
• all business expenses
The easiest record is to pay for all business expenses by bank payment or credit card but keep the receipt too as evidence that the expense was for business.
It is as important to keep a record of all income that is not business income to provide evidence that this is not to be included in your taxable income. For example: if you sell your caravan, piano or even outgrown toys or clothes. Or if you pay some of your savings into your business.
Why you keep records
The records are the basis for calculating your profit for tax and HMRC may ask to see them.
You must make sure your records are accurate.
• All your business records must be kept for 5 years following the filing date of the tax year.
• So for the tax year ended 5th April 2019 (filing date 31st January 2020) records must be kept until 31st January 2025…Then you can burn or shred them during your spring clean.
Further records to be kept at the end of the business year include :
• Unpaid invoices issued
• Unpaid expenses of invoices received
• the stock value at the cost that you paid for it
• details of scrapped stock
• work that you have completed (or part completed) but not invoiced at the end of the yea