Record Keeping for the Self-Employed

business record keeping

If you provide a service or sell a product and are not registered as a limited company, you are a sole trader, which means you run your business as a self-employed and have to keep certain accounts records to report your income, expenses and profit to HMRC annually on your tax return. Business record keeping is essential if you want to be able to accurately analyse your business income and outgoings.

Many sole traders have had to set up their little enterprise throughout the 20s so far, with many having little to no guidance on how to maintain their own business. Therefore, many are not aware of what records they need to keep.

Record Keeping

Firstly, you will need to keep tabs on all details of your sales and income for your business. However, not all of your income will be classed as trading income.

There are investments into the business or loans from third parties that would not be classed as taxable income. Also, grants such as the SEISS and Furlough claims are classed as taxable income which must be included in the tax returns. As well as this, all expenses around the selling of your product or service and running of your business have to be provided, including advertising, materials, insurances, phone charges and stationary if applicable.

Also inclusive would be copies of VAT returns, including what you have paid and reclaimed. These would be supported by transactions to make up the total of each box on your VAT return. Finally, you will need to include any records of wages and deductions if you are an employer.

Tax Return

When completing your tax return, the total income earned for the year as well as your expenses will need to be entered. Your profit for the year will be taxable, and if you have adequately kept your records up to date and organised over the year, the calculation of these two records will be easier.

If HMRC wants to check on your figures submitted they will ask for you to provide them with proof of the income and expenses you have submitted. This usually falls into the realm of sales invoices, invoices and receipts supporting your purchases and bank statements.

It is best to have these documents easily accessible by having both paper and electronic formats to hand.

Maintaining Records

It is recommended that all accounts records be kept for at least a minimum of 5 years following the submission date to HMRC.

Many self-employed or sole trader business owners may feel incredibly intimidated by the amount of record-keeping they have to consider within a financial year, which is why many choose to work alongside bookkeeping services in Manchester that specialise in small business bookkeeping solutions.

A bookkeeper outsourced means that you have the proper guidance and support to keep your records in line with what is required to file your tax return. For bookkeeping services that cater to small business owners, contact the team at Pebbles today for help with business record keeping.

What our clients say…

I changed book-keepers around a year ago because of a disagreement.  I employed Diane of Pebbles and having been with the same firm for 10 years, I was amazed by how easy working with Diane was.  Not only did the change save me money but also saved me time.  Utilising new technologies (to me) have massively improved the amount of money I can claim back in VAT and has made the whole process speedier and well as easier.  Even when Diane is chasing me for information she does in a friendly professional manner.  I’m thrilled to be working with her and would recommend her to anyone.

Steve Tanswell, Manchester Facades

“Pebbles have provided professional and personal approach to all our accounts needs from processing invoices to management accounts. Based in-house they have become a valuable asset to the business and have given us a more strategic and analytical approach to our finances.”


Robert Flinn, Director, The Drawing Room

“We began to relinquish our bookkeeping tasks to Pebbles Bookkeeping in September 2020, following our meeting with Diane Huxley to discuss our requirements. We signed up with Diane immediately. We have all built a quick rapport with Diane and it’s good to know that we have her support and expertise at the other end of the phone.

Pebbles Bookkeeping is a perfect fit for our company and liaises seamlessly with our accountant. It is our pleasure to work alongside them.”

TecCre8 Ltd

Read our blog

Our awards