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Business Records if you’re Self-Employed

You must keep records of your business income and expenses for your tax return if you’re self-employed as a sole trader or a partner in a business partnership. You’ll need to keep records of your personal income and if you’re the nominated partner in a partnership, you must also keep records for the partnership.


Overview
 

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 2014. You record that invoice for the 2013 to 2014 tax year - even if you didn’t receive the money until the next tax year.

Cash basis accounting


Most small businesses with an income of £83,000 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 won’t need to pay Income Tax on money you haven’t yet received in your accounting period. There are different rules on keeping records for limited companies.

What records to keep
 

You’ll need to keep records of:

  1. all sales and income
  2. all business expenses
  3. VAT records if you’re registered for VAT
  4. PAYE records if you employ people
  5. records about your personal income

Why you keep records

You don’t need to send in your records in when you submit your tax return but you need to keep them so you can:

  • work out your profit or loss for your tax return
  • show them to HM Revenue and Customs (HMRC) if asked

You must make sure your records are accurate.

Keep proof

Types of proof include:
  • all receipts for goods and stock
  • bank statements, chequebook stubs
  • sales invoices, till rolls and bank slips

If you’re using traditional accounting

As well as the standard records, you’ll also need to keep further records so that your tax return includes:
  • what you’re owed but haven’t received yet
  • what you’ve committed to spend but haven’t paid out yet, eg you’ve received an invoice but haven’t paid it yet
  • the value of stock and work in progress at the end of your accounting period
  • your year end bank balances
  • how much you’ve invested in the business in the year
  • how much money you’ve taken out for your own use

Business expenses
 

You’ll need to record all your business expenses for your tax return.

Allowable expenses

These can include:

  • office stationery or printing costs
  • staffing costs
  • use of premises
You can claim some of these allowable expenses using the ‘simplified expenses’ scheme - this lets you use flat rates to reduce the amount of record-keeping you need to do.

Vehicles

‘When you buy a vehicle, you can claim ‘capital allowances’ for part of the cost each year. For some vehicles you can claim all of the cost in the year you buy it.

You can also claim a capital allowance if you already own a car or vehicle and start to use it in your business. You need to find out the value of the car when you start to use it for your business.

You can’t use simplified expenses and capital allowances for the same vehicle - you must choose one or the other.

If you claim capital allowances, you must keep records of:

  • what you paid for any vehicle
  • CO2 emission level (for cars bought after 6 April 2009)
  • any personal use of the vehicle
  • allowances claimed each year
  • the remaining value of a vehicle after allowances have been deducted
  • the proceeds of any vehicles sold, exchanged or given away

Buying equipment, plant or machinery

When you buy office equipment, furniture, machines or tools for your business, you can claim them as capital allowances. These are called ‘plant and machinery’.

Most businesses can claim an ‘annual investment allowance’ (a type of capital allowance) for the full cost of business equipment bought in a particular year.

You’ll need records of:

  • the purchase price of any equipment
  • the proceeds of equipment you claimed the annual investment allowance for and have sold, exchanged or given away
  • any private use
If you claim the allowance over a number of years, you’ll also need a record each year of:
  • allowances claimed
  • the remaining value of any equipment after allowances have been deducted

HM Revenue and Customs (HMRC) has detailed guidance on capital allowances and annual investment allowances on plant and machinery.

Leasing equipment

This is dealt with under allowable expenses instead. You must keep the leasing agreement and a record of all lease payments you make.

Working from home

You can claim costs if you work from home.

If you're not using simplified expenses (flat rates) for this, you must keep all the bills you’ve paid and show what portion of each bill is due to you working at home.

Personal use of business assets
 

If you use business assets for both personal and business use, you must:

  • work out the value of your personal use
  • take that away from the total amount you claim against your tax bill
You must keep records so you can work this out accurately.

Example

You use a computer for business reasons as well as personal use at home.

Keep records which show how much time you’ve spent using the computer for business and personal use, so you can work out the right proportion to claim as a business expense.

Keep your business and personal records separate so you can accurately complete each part of the tax return.

How long to keep your records
 

You must keep your records for at least 5 years after 31 January of the relevant tax year.

Example

If you send your 2013 to 2014 tax return online by 31 January 2015, you must keep your records until at least the end of January 2020.

Very late returns

If you send your tax return more than 4 years after the deadline, you’ll need to keep your records for 15 months after you send your tax return.

If your records are lost, stolen or destroyed

If you can’t replace your records, you must do your best to provide figures. Tell HM Revenue and Customs when you file your tax return if you’re using:

  • estimated figures - your best guess when you can’t provide the actual figures
  • provisional figures - your temporary estimated figures while you wait for actual figures (you’ll also need to submit actual figures when available)

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Posted by Scriba PR
HMRC are “Making Tax Digital”. Are you in the know?

Monday 20 March 2017

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Posted by KC Communications
Sheards Accountancy announce charity partnership with Kirkwood Hospice

Monday 20 February 2017

Leading Huddersfield accountants, Sheards Accountancy, have announced that their charity partnership for 2017 will be with Kirkwood Hospice. The partnership will see Sheards undertake a variety of fundraising activity throughout the year with a target of raising £4,000 which will go towards a piece of vital equipment for the in-patient unit from the Hospice’s Birthday Wish List. Kirkwood Hospice, who are celebrating their 30th anniversary this year, provide free of charge, specialist care to adults across Kirklees who suffer from advanced or progressive illnesses. Sheards will host a number of fundraising events which will include their ever-popular, annual curry night which will be taking place in Spring and has historically seen over 100 local business professionals attend. Kevin Winterburn, Director of Sheards Accountancy commented: “Kirkwood Hospice have been such a huge part of the community for 30 years and have helped so many. We are really looking forward to working towards our fundraising total to support the fantastic work that Kirkwood Hospice do." Kate Leadbeater, Partnership Development Manager of Kirkwood Hospice commented: “Our new charity partnership with Sheards is one that we really value and we can’t thank them enough for choosing Kirkwood Hospice. Sheards have fantastic links to the business community and have some great events planned to promote our work to other local businesses while raising money to support our charity. We really appreciate Sheards’ support and look forward to working with them this year.”
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3 results found 

Events Posted

3 results found 
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Sheards Charity Curry Night
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70, John William Street, Huddersfield, HD1 1EH
£20 - 50 places
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Introduction to Xero Cloud Accounting
Thursday 18 May 2017, 10:00 - 12:00
Abacus House, Pennine Business Park, Longbow Close, Huddersfield, HD2 1GQ
20 Credits - 15 places remaining
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Introduction to Xero Cloud Accounting
Thursday 8 June 2017, 10:00 - 12:00
Abacus House, Pennine Business Park, Longbow Close, Huddersfield, HD2 1GQ
20 Credits - 15 places remaining
3 results found 
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