What records you have to keep
The records a sole trader needs: what came in, what went out, and the proof for both. Sort a month of costs into proved and not proved.
This path is practice in how the records and the sums work. It is not tax advice. Any rate or allowance in a question is an example for that question, so check GOV.UK for the current figures.
In this room: 3 tasks, 9 questions
- The records that matter3 questions
- How long to keep them3 questions
- Proof behind every figure3 questions
You need a record of all business income and all business costs, with the proof behind each figure.
- Sales records
- a copy of each invoice and a note of every amount received
- Purchase records
- receipts and bills for what the business bought
- Bank records
- statements for the account the business uses
- Mileage log
- the date, the reason and the miles of each business trip
Records can be kept on paper, in a spreadsheet or in software. A clear photo of a receipt is a record too.
Some sole traders must keep their records in software and send updates to HMRC during the year. This is called Making Tax Digital, and who it applies to is on GOV.UK.
Answer the questions below
2 more questions follow in this task.
Records are kept for years after the tax return is sent, because HMRC can ask to see them.
The rule used in this room: keep the records for a tax year for at least 5 years after the 31 January deadline for that year. Check GOV.UK for the current rule.
The tax year runs from 6 April to 5 April. The online return for it is due by the next 31 January.
Answer the questions below
2 more questions follow in this task.
A figure with no proof behind it is hard to defend if it is questioned. Check each cost for its receipt or bill.
| Details | Amount | Receipt kept |
|---|---|---|
| Trade paint | 124.80 | Yes |
| Brushes and rollers | 36.50 | Yes |
| Ladder hire | 40.00 | No |
| Van fuel | 58.00 | Yes |
| Filler and sandpaper | 14.70 | No |
If a receipt is missing, ask the supplier for a copy. Keep the bank statement line that shows the payment as well.
Answer the questions below
2 more questions follow in this task.