Business records if you're self-employed

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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

This guide is also available in Welsh (Cymraeg).

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.

From the 2024 to 2025 tax year, cash basis is now the default method of accounting. You must opt out if you want to use traditional accounting or cannot use cash basis accounting.

Cash basis accounting

Most small businesses 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.

Example

You invoiced someone on 15 March 2023 but did not receive the money until 30 April 2023. Record this income for the 2023 to 2024 tax year.

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 2023. You record that invoice for the 2022 to 2023 tax year - even if you did not receive the money until the next tax year.

  1. Step 1 Check if being a sole trader is right for you

  2. Step 2 Choose your business name

  3. Step 3 Check what records you need to keep

    When you start trading you must keep records. This will help you work out your profit or loss for your tax return.

    1. You are currently viewing: Find out what business records you need to keep
  4. Step 4 Register as a sole trader

  5. Step 5 Check what taxes may apply to you

  6. Step 6 Plan for your tax bill

    You may need to pay Income Tax on your profits and may need to pay National Insurance contributions.

    1. Get an estimate of how much you will need to pay
    1. Find out more about Income Tax rates
    1. Find out more about National Insurance rates
  7. Step 7 Get help and support