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As a self-employed sole trader, you are required to maintain and keep records of your income and expenses to help you prepare your Tax return every April. This is known as bookkeeping and should be a regular activity to help you keep your business finances organised.

It is also recommended that you keep good records in case HMRC need to check the figures declared on your Tax return.

What bookkeeping options are available for my business?

There are actually quite a few options out there for businesses to keep a track of their income and expenses.

Firstly, you have the choice between keeping physical and online records. If you’re not as tech savvy as other people you can use a simple cash book like this on Amazon:

bookkeeping with Simplex D accounts book

Although it looks daunting, they’re actually quite simple to use. Each page represents one week. You would record your sales at the top, your stock expenses on the left and overhead expenses on the right.

Finally, you can report on your weekly summary in the bottom section. At the end of the year you would then use this book to prepare your Tax return, or simply pass it your accountant for them to use.

Electronic Records

However, if the thought of writing and keeping physical records is overwhelming you can choose from the different software packages available such as: Xero, Quickbooks and Sage.

 The only downside to software options are the fees and once you cancel your subscription you can lose access to your records. A third option to track your income and expenditure is our mobile app. It is both easy to use and free to download.

Also Making Tax Digital is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their expenses.

No matter what avenue you decide to go down, HMRC state that it legally mandatory to keep all records for at least 5 years.

What types of expenses can I claim for?

Expenses can include but are not limited to:

  • Weekly work-related mileage – if you travel for work you should keep a track of the miles
  • Parking charges and toll charges
  • Uniform/Workwear – the items must be either hi-vis safety gear or display the businesses logo on
  • Work related tools and equipment – including hire purchases
  • Any materials you have to buy for jobs
  • Equipment such as a mobile phone, laptop etc
  • Monthly phone bill and internet – Include percentage of usage for work
  • Work related accommodation

Be sure to keep precise, detailed records as well as all receipts for purchases of goods. The better you record your income and expenses, the easier it will be when it comes to completing your self-assessment tax return in April.

Not only that, but the more details of expenses you have, the lower your end Tax liability will be! It is therefore essential that you keep good records from the very start.