What records Do I Need to keep?
Whatever your business type you MUST keep accurate records and this means keeping a record of everything the business buys and sells.
There are a few basic record keeping rules which you must follow:
Rule one : Always get a receipt for every item of expense. No receipt = no deduction
Rule two : Always raise a duplicate sales invoice for sales or money received and mark whether it is paid in cash or by cheque and when.
Rule three : Always keep the items from rules one and two.
You need to keep self employment records for five years and limited company or partnership records for six years after the latest date your tax return is due.
What expenses can I claim when working from home? Go to the link below for an article
http://www.accountingweb.co.uk/cgi-bin/item.cgi?id=177635&d=1032&h=1019&f=1026
Keeping a Cash book
Get an A4 (or larger) lined blank book. Use one page for per month (or week if you have a high volume of transcations). Make some columns. (or if you are computer literate set up an excel spreadsheet)
Per month: On the left hand page list all your income. On the right hand page list all your expenditure. Use the headings: Date, Description of the purchase or income, net amount, VAT, gross amount.
Use the columns to analyse out your main different types of expenses / incomes. For example if you are a manufacturer your main type of expenses will probably materials, tools, motor expenses, fuel, drawings etc ... At the end of each month underline the last entry and tot up all the totals. You now know exactly how much income you had and how much expenditure you had in the month and can see at a glance if you have made or lost money that month.
Below is a simple example of a simple cash book;
| Sample Cash book 2010 | |||||||||
| Total | Income | Materials | Telephone | stationery | Rent | Drawings | |||
| Date | Details | ref | |||||||
| 2,085.47 | 850.00 | 723.29 | 51.31 | 110.87 | 1,200.00 | 0.00 | |||
| 01/01/2010 | Phone | 1 | 51.31 | 51.31 | |||||
| 01/01/2010 | Postage | 2 | 48.97 | 48.97 | |||||
| 03/01/2010 | Materials | 3 | 521.39 | 521.39 | |||||
| 15/01/2010 | Rent | 4 | 600.00 | 600.00 | |||||
| 20/01/2010 | Materials | 5 | 94.99 | 94.99 | |||||
| 21/01/2010 | Printer Ink | 6 | 61.90 | 61.90 | |||||
| 31/01/2010 | Invoice103 | 7 | 0.00 | 850.00 | |||||
| 15/02/2010 | Rent | 8 | 600.00 | 600.00 | |||||
| 28/02/2010 | Materials | 9 | 106.91 | 106.91 |
Keep a list of all your sales and other income;
Keep a list of all your expenditure relating to your business;
Keep a cash book for items paid or reeceived through the bank account - see below
Keep a separate list for petty cash expenditure (if relevant);
Keep Bank statements and correspondence from HMRC;
Keep a record of goods taken for personal use and payments made to the business for these;
Keep a record of all business and private miles travelled and keep all your petrol receipts;
If you hold stock, keep stock records and carry out regular stock takes.
If you are VAT registered, make sure that when you make purchases of goods or services that you get a VAT receipt and the VAT receipt is invoiced to the name on the VAT registration certificate.