Use this guide if you are self-employed or run a small business and your paperwork is scattered. Have your bank statements, invoices you have sent, receipts for business costs and any accounting software login ready.
Step by step
Separate business and personal money
Use a separate bank account for your business if you can, even as a sole trader. This makes it much easier to see business income and expenses. Limited companies must keep company money separate.
Decide on your system
Choose a spreadsheet or accounting software to record income and expenses. Check on GOV.UK whether Making Tax Digital rules apply to you, as they may require compatible software and digital records. Use one system consistently.
Record all income
Log every invoice or sale with the date, customer, amount and VAT if you are registered. Match payments received against invoices. Keep copies of all invoices issued.
Capture expenses and receipts
Photograph or scan receipts as soon as you get them and store them in dated folders or in your software. Record the date, supplier, amount and what it was for. Check GOV.UK for which expenses are allowable, as rules differ for business and personal use.
Reconcile every month
Once a month, compare your records with your bank statement and make sure every transaction is accounted for. Chase missing receipts while they are still easy to find. A regular habit avoids a stressful rush before deadlines.
Store records for the required time
Keep records for at least the period HMRC requires, which differs by business type, so check the current rules on GOV.UK. Back up digital files to a secure second location. If you are unsure about anything, speak to an accountant or contact HMRC.
Ready-to-use checklist
- Separate business bank account
- Spreadsheet or software chosen
- Making Tax Digital position checked
- All invoices recorded
- Receipts scanned and filed
- Monthly reconciliation done
- Backups in place
- Retention period checked on GOV.UK
Practical tips
- Name receipt files with the date and supplier so they sort automatically.
- Put money aside for tax each time you are paid so the bill is not a shock.
- Keep mileage logs as you go rather than trying to reconstruct them at year end.
Common problems
I have lost some receipts from earlier in the year.
Check your bank statements, email confirmations and supplier accounts for copies or invoices. Ask suppliers to resend them. Keep a note explaining any expense you cannot fully evidence.
I mixed personal and business spending on one card.
Go through the statement and mark each business item clearly, keeping receipts for them. Only claim the business portion. Open a separate account to avoid this in future.
HMRC has written asking about my return.
Read the letter carefully, note any deadline and gather the records it asks about. Reply by the date given, and if you are unsure, contact an accountant or HMRC for help. Check the letter is genuine by contacting HMRC through GOV.UK rather than any number in a suspicious message.