Why Is Record Keeping Important?
Solid record keeping isn’t just about box-ticking. It plays a central role in:
– Submitting accurate tax returns
– Tracking business performance
– Providing evidence in the event of an HMRC enquiry
– Supporting claims for tax relief or VAT
– Making informed business decisions
Failing to keep proper records could result in fines or penalties, but beyond compliance, it’s a chance to build better habits that support your business growth.
What Records Does HMRC Require You to Keep?
HMRC expects every business, regardless of size or structure, to maintain a clear, detailed account of its financial activities. These typically include:
– Sales and income – Invoices, receipts, bank credits
– Purchases and expenses – Receipts, bills, credit card statements
– PAYE records – If you employ staff
– VAT records – If you’re VAT registered
– Bank and loan statements
– Grants or support payments received (e.g. COVID-related support)
You can find full HMRC guidance on record keeping here: https://www.gov.uk/keeping-your-pay-tax-records
How Long Should You Keep Business Records?
Limited Companies
Must keep records for at least 6 years after the end of the company financial year. In some cases (e.g. if a transaction covers multiple years), you may need to keep them longer.
Sole Traders and Partnerships
Must keep records for at least 5 years after the 31 January submission deadline for the relevant tax year. For example, for the 2023/24 tax year (ending 5 April 2024), you’d keep records until at least 31 January 2030.
Types of Records You Should Keep
Income Records
– Sales invoices
– Bank statements or deposits
– Point of Sale (POS) receipts
– PayPal, Stripe, and card processor reports
– Online platform payouts (e.g. Etsy, Shopify, eBay)
Expense Records
– Supplier invoices and purchase receipts
– Mileage logs for travel claims
– Utility and phone bills
– Rent and insurance documentation
– Staff wages and pension payments
– Subscriptions (e.g. software, memberships)
VAT Records (if applicable)
– VAT invoices issued and received
– VAT account
– Import/export declarations
– Proof of reverse charge transactions
Digital vs Paper Records
Benefits of Digital Record Keeping
– Easier to organise and search
– Safer from loss or damage
– Reduces admin time
– Enables real-time insights into cash flow
– Required for MTD compliance
Top Tips for Staying Organised
1. Set Up a Weekly Routine
Allocate 30–60 minutes each week to log expenses, scan receipts, and reconcile transactions.
2. Go Paperless Where You Can
Use a receipt-scanning app like Dext or upload directly to your accounting software.
3. Keep Personal and Business Separate
Always use a dedicated business bank account, even if you’re a sole trader. This makes bookkeeping far easier.
4. Review Monthly, Not Just Annually
Set time aside each month to review income, costs, and profit. This gives you visibility before year-end surprises.
Common Record Keeping Mistakes to Avoid
– Throwing receipts away too soon
– Not tracking mileage properly
– Failing to record small cash transactions
– Using the wrong VAT rates
– Letting months go by before updating accounts
How We Can Help
At A Wigglesworth & Company, we don’t just file your accounts, we help you stay organised all year round.
Whether you’re setting up a brand new system, switching to cloud software, or simply need a second pair of eyes, we’ll work with you to tailor the right solution.
Based in Doncaster, we serve clients nationwide and overseas, offering a friendly, personal service backed by decades of experience.
Get Expert Support with Record Keeping
If you’re unsure what to keep or how to keep it, don’t leave it to guesswork. Contact us today for personalised support and practical tools to help you stay on top of your records, and ahead of HMRC.