Bookkeeping and Taxation
For many people considering self-employment, bookkeeping and taxation are among their main concerns.
Understanding what records to keep, which deadlines apply and how to organise your finances can make running a business more manageable.
Keeping clear business records
Sole traders and business partnerships must keep records of their business income and expenses for Self Assessment. Different requirements apply to limited companies and other legal structures.
Depending on your business, useful records may include:
- Sales and other business income
- Purchases and business expenses
- Invoices, receipts and supporting documents
- Bank and payment-service transactions
- Money owed by customers
- Amounts owed to suppliers
- Equipment and other business assets
Keeping business and personal transactions clearly distinguishable can make it easier to understand your figures and prepare the information required for tax purposes.
Understanding taxation
Your responsibilities will depend on factors such as your legal structure, income and business activities. They may include registering with HMRC, completing tax returns, paying Income Tax and National Insurance contributions where applicable, and meeting relevant deadlines.
Missing filing or payment deadlines may result in penalties and interest. Tax rules can also change, so it is important to check current HMRC guidance or obtain advice appropriate to your circumstances.
Use bookkeeping to understand your business
Bookkeeping is not only about completing a tax return. Up-to-date records can help you monitor sales, control spending, follow up unpaid invoices and understand the cash available to the business.
TfE can help you understand the principles of bookkeeping, Self Assessment, taxation and important business deadlines. Contact TfE to find out more about our self-employment support.
TfE provides general business information and guidance. It does not provide legal, tax, financial or investment advice.