Keeping Good Business Records: A Simple Guide for UK Entrepreneurs
By Own Boss |
September 9, 2025
For any entrepreneur, good record-keeping is not just about staying on the right side of HMRC; it's the foundation of a healthy business. Accurate records give you a clear, real-time picture of your financial performance, helping you make smarter decisions, secure funding, and simplify your tax returns.
What Records to Keep
You are legally required to keep records of all your business's financial transactions. This includes:
- All Sales and Income: Keep copies of all invoices you send out, bank statements showing payments received, and receipts from cash sales.
- All Business Expenses: Keep receipts and invoices for everything you buy for the business. This includes stock, office supplies, software subscriptions, travel costs, and rent.
- VAT Records (if registered): You must maintain a VAT account, showing the VAT you've charged on sales and paid on purchases. These records are essential for your quarterly VAT return.
- Payroll Records (if you employ staff): You must keep records of employees' pay, deductions (like tax and National Insurance), and any reports made to HMRC.
- Personal Money: Keep a record of any money you have invested in or taken out of the business (drawings).
How to Keep Them Organised
- Embrace Digital Tools: Modern accounting software (Xero, QuickBooks, FreeAgent) is the easiest way. You can link your business bank account, snap photos of receipts with your phone, and automate much of the process.
- Use Spreadsheets if Starting Out: If your business is very simple, a well-organised spreadsheet can work. Have separate tabs for income, expenses, and a summary.
- Backup Everything: Whether you use software or spreadsheets, ensure your data is backed up regularly to a cloud service like Google Drive or Dropbox. Losing your financial records can be disastrous.
- Follow the Rules: In the UK, you must keep financial records for at least 6 years after the end of the last company financial year.
Why it Matters: Good records allow you to monitor profitability, manage cash flow, prove your figures to HMRC, and provide evidence if you need to apply for a business loan or investment.