What Records Does a Sole Trader Need to Keep ?

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What Records Does a Sole Trader Need to Keep for their Accounts?

Being self-employed can be a lot of hard work, but when it’s going well – it’s so rewarding, being your own boss, making your own business, and taking the direction you want to take!  What Records Does a Sole Trader Need to Keep?

But there are certain rules and regulations that you need to be aware of, and records that need to be kept in order to keep you compliant with HMRC and UK laws.

When you’re first starting out, it might feel like it’s more cost effective and simple to do your accounts yourself, but as your business grows, so to will the complexity of the records you need to keep – and the need to have them updated on a regular basis.

We’re going to walk you through some of the records and data you need to keep (and update regularly) as a sole trader, in order to keep your business functioning, growing, and staying on the right side of the law!

What are the Basics You Need to Know for Your Professional Accounts?

Before we dive in depth, it’s important to highlight the basics – because if you’re not getting this right, it’s going to mess with all of your accounts.

You need to keep regularly updated accounts that cover:


Not every expense can be claimed against your profits – but you must note down all of your data. You might do this manually, through a spreadsheet, or using a bookkeeping software that’s appropriate for your needs.

When it comes to keeping receipts, invoices, etc – HMRC recommends that you keep all records that relate to sales and expenses, this might include:

Invoices of sales
Bank slips or till rolls (if applicable)
Bank statements
Business expenses (such as travel, office costs, business phone bills, etc)
Any other personal income records (such as P45s, P60s, P11Ds, payslips, etc)

Whilst you can claim for expenses, even if you didn’t get a receipt, it’s not advised – because if a Tax Officer decides to open an investigation against you or your business, it will be up to you to provide sufficient proof that you have legitimately claimed for the expenses and can prove that the figure you’ve claimed for is correct.

What Costs Can You Actually Claim for, and What Records Does a Sole Trader Need to Keep?

HMRC aren’t particularly helpful when it comes to explaining what you can claim as business expenses – they don’t list everything on their website (just examples), so if you’re not aware, and are only claiming for what they’ve got listed, you could be missing out.

At the most basic level, if a cost is incurred because of your business, or for your business, then you can claim all or part of it back. Business costs that sole traders may expect to claim for could include: rent, stationary, travel to customer premises (but not to and from your office), phone bills, motor expenses, computer equipment, internet access, etc.

It’s important to develop good habits early on – get used to keeping track of your costs, asking for receipts, and always getting invoices or receipts from your clients. Make a point of updating your accounts on a regular basis, ensuring that you include:

What the cost or payment was for
How much it was
When it was paid (in or out)
Who it was paid (by or to)

HMRC is gradually rolling out a program called ‘Making Tax Digital’, which means doing your accounts online – and a lot of good bookkeeping software is compliant with the requirements of this program, which saves time, money, and effort when it comes to preparing end of year submissions.

Business records for sole traders (and partnerships) must be kept for at least five years (after the 31 January tax return deadline of the relevant tax year) – and if you’re approaching the VAT Threshold (£85k per annum), then you’ll need to keep an eye on your record keeping too, as businesses registered for VAT (and Limited Companies) must keep their accounts for at least 6 years.

If you’re new to self-assessment and being a sole trader, or just want to confirm that you’re getting all the tax reliefs and benefits that you’re entitled to, then you should get in touch – contact us today and book a consultation; our team is waiting to bring you expert advice and assistance, and all the services you need to help your business grow!

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