Do I Keep Records If I am Self-Employed?

accounting records

If you make income working alone through the selling of a product or a service and you are not registered as a limited company, you are classed as a sole trader. A sole trader does indeed run their own business and is classed as self-employed. Being self-employed does require certain accounting records needing to be kept to report your income, expenses and profit to HMRC on your annual tax return. If you are a partner in a business you are also considered to be self-employed and need to ensure that the partnership keeps all relevant accounting records to report your share of the income, expenses and profit generated from the return to your self-assessment tax return.

The Records Required

Being self-employed, there are a few records that you need to hand.

First of them would be your details around all sales and income. Not all income you have is trading income, such as an investment you make into the business or any loans your receive from third parties. These are not taxable income either.

Any grants which you may have received such as a SEISS or Furlough claim if you are an employer are classed as taxable income and will be required for your tax return. You must document all expenses relating to the selling of your product or service and the running of your business through them. This covers a range of areas such as any materials, advertising, insurance, phone bills and stationary, as well as other costs. This would include wages also for any staff, but not your own.

Providing copies of your VAT return and any VAT you have paid or reclaimed if you are VAT registered, which must be supported by the transactions making up the total of each box on your VAT return is also required, along with records of any wages or deductions if you are an employer.

Tax Return

In preparing your tax return, your total income for the year will have to be entered along with your total expenses. All profits made throughout the year will be taxable, and by having your accounting records organised and up to date throughout the year by bookkeeping services, you will be able to easily calculate the two figures.

HMRC may want to check all figures that are submitted in your tax return and will request proof of your income and expenses. Therefore, it is recommended that all copies of your sales invoices, till rolls, invoices and receipts on all purchases and bank statements be accessible to hand in paper or electronic formats.

For more information on self-employed bookkeeping and accounting records, contact the team at Pebbles for bookkeeping services in Manchester.

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

A massive thank you to Diane at Pebbles Bookkeeping & HR. You took the huge stress away from where do I start, with employee policies etc. You have created us a great, informative employee handbook, covering all necessary policies and risk assessments in a matter of no time and from the other side of the world too. I will definitely be in touch for any future help our company needs.

Lisa Heggie, The Gunnery

Diane has been providing her services to my company for approximately 6 months now and I can honestly say that due to her assistance, my company is running a lot more smoothly than it has at any time over the previous 30 years that it has existed.

I would just like to say that I would recommend her services to any business, whatever the size, as I can only see that her services would be beneficial to any company that may choose to employ her services.

Wayne Dinning, Managing Director, SD Waste Paper Limited

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