Business records if you're self-employed

Overview

You must keep records of your business income and expenses for your tax return if you’re self-employed as a:

  • sole trader
  • partner in a business partnership

You’ll also need to keep records of your personal income.

If you’re the nominated partner in a partnership, you must also keep records for the partnership.

There are different rules on keeping records for limited companies.

Accounting methods

You’ll need to choose an accounting method.

Traditional accounting

Many businesses use traditional accounting where you record income and expenses by the date you invoiced or were billed.

Example You invoiced a customer on 28 March 2018. You record that invoice for the 2017 to 2018 tax year - even if you did not receive the money until the next tax year.

Cash basis accounting

Most small businesses with an income of £150,000 or less can use cash basis reporting.

With this method, you only record income or expenses when you receive money or pay a bill. This means you will not need to pay Income Tax on money you have not yet received in your accounting period.

ExampleYou invoiced someone on 15 March 2018 but did not receive the money until 30 April 2018. Record this income for the 2018 to 2019 tax year.

  1. Step 1 Check if being self-employed is right for you

  2. Step 2 Choose the name you want to trade under

    1. Check the rules for sole trader business names

    You can register a trade mark if you want to stop people from trading under your business name.

    1. Apply to register a trade mark
  3. Step 3 Check what records you'll need to keep

  4. Step 4 Register for tax

    To pay tax, you'll need to register for Self Assessment.

    1. Apply for a National Insurance number if you do not have one
    2. Register for Self Assessment

    You might need to register in a different way if:

    You may also need to register for VAT.

    1. Check if you need to register for VAT