Record keeping for self-employed person
Would you like to know what Records to keep as a Self-Employed Person?
Watch this video from the HMRC
https://www.youtube.com/watch?v=b64-WFmUHRw
This is a HMRC webinar about record keeping for the self-employed and covers:
- Setting up a record keeping system
- What to record
- How long to keep records
- Record keeping mobile applications.
It doesn’t matter whether you start working for yourself as a plumber, childminder, electrician, or odd job man, it is important to put in place a good record keeping system that you keep up to date regularly.
This video shows how keeping a good record is important and how a keeping system can help you.
You will be able to show HMRC where money coming into your business has come from and what you have spent money on.
If you are unable to do this, and can’t show that you have taken reasonable care in recording your information, HMRC can charge you interest and penalties. You can also be charged penalties for sending in an incorrect tax return.
But the benefits of setting up a good record keeping system are not limited to avoiding paying HRMC interest and penalties.
There are lots of reasons why having a good, regularly updated business records can help you and your business, such as:
- Having lower accountants fees
- Provide a bank or other loan provider details of your income and outgoings
- Budget for tax payments
- You know where you stand financially
- Receive the tax credits that you are entitled
- Able to complete a tax return correctly
- You will pay the right amount of taxes.
If you are small, low turnover business you may find out that a cash books and a petty cash book are enough to record your business income and outgoings.
If your income is straightforward and your outgoings are minimal you can record your businsess receipts and business expenses in an ordinary lined book.
Motor usage
If you use your car or van in the day to day running of your business you can claim a reduction for the business use of the vehicle.
To calculate the use there are 2 methods:
-Cost method
Make a note of your mileage reading at the start and at the end of your accounting period and you will also need to record details of all business miles travelled and keep records of all you motoring costs as fuel receipts, repairs, insurance and servicing. With this information, you will be able to calculate the proportion of your motoring cost that relate to the business
and then claim this and claim capital allowances
-HMRC’s approved mileage allowance payment method
Using this method, the motoring cost will be calculated using a fixed amount per mile travelled on business. You won’t be able to claim any other motoring expenses other than interest on any loan used to by the vehicle. This method requires you to keep a record of you business miles.
Working from home
Expenses that you can claim from working from home:
Running costs
This vary depending on the amount of business use (heating, lightning)
Fixed costs
These costs are related to the whole house and have to be paid even if there is no business use (mortgage and insurance)
Keep your records for 6 years after the end of the tax year they refer
Mobile Record keeping applications
Mobile record keeping apps are making record keeping easier for small business.
Simple record-keeping apps can take photos of receipts, record cash and non-cash transactions, itemise transactions by payment method, etc. You can find more about this on the HMRC’s website.
Remember:
T– Time. Set aside some time on a regular basis to update your records
I– Importance. Not to mix up your business finances with your personal ones.
C– Control. The fewer people involved in managing it, the less room for mistakes or other problems.
K– Keep your business records for a minimum of 6 years. Backup computer records regularly and stores paper copies safely.