If you are Sole Trader, contractor, free lancer or Partnership firm, you should have planned for year end finishing on 5th April. Or if have not done anything it’s time to sort out all relevant matters before filing tax return for the year.In this blog we are discussing about business records to keep as self employed and subsequently we will discuss other type of income and how to file the self assessment tax return.
1.Record of your business:
You must keep the record of your business income & expenses if your are sole trader or partner in a business.You will also need to keep record of your personal income.If you are nominated partner, you must also keep record for it as well.
There are different rules for keeping records for Limited companies & we will discuss it later in a separate blog
2. Accounting methods:
You need to choose an accounting method based on your business nature either
accrual orcash basis.
You can only record income or expenses when you paid or received income in cash basis while in accrual basis you can record income or expenses when you committed, and will receive or pay later.
3. Keep Records:
You need to work out your profit & loss for your tax return & make sure your records are accurate.
You must keep records of
All receipts for goods & stockBank statements, cheque stubsSales invoices, till rolls, bank slips
Also if accrual method, the receivables, payables, closing bank balances ,how much invested & money taken out from business.
4. How Long to Keep records:
You must keep records for at least 5 years after the 31st January submission deadline of the relevant tax year.HMRC may check your records to make sure you are paying the right amount of tax.
5. If your records are Lost or stolen or destroyed:
If you cant replace your records ,you must do your best to provide figures.Tell HMRC when you file your tax return if your are using :
Estimated figuresProvisional figures-your temporary estimated figures while you wait for actual.You will need to submit actual figures when available.
If you need help regarding accounting methods or how to find out estimated or provisional figures or you recently started as self employed, contractor or free lancer you can email us.
firstname.lastname@example.org or tweet at @PyramidPointAcc