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Keep the Right Records When Newly Self Employed

By: Maggie Lonsdale BA (hons) - Updated: 9 Jul 2010 | comments*Discuss
 
Business Record Details Self-employed

It is imperative that you keep the correct paperwork when you are newly self-employed as your business can be checked and assessed at anytime. It also means that you have access to whatever paperwork is needed in response to phone calls or letters that you may receive from the government, which will give you peace of mind at a time when you really don’t need anything else to be worried about!

The first point to mention is that, while anyone is entitled to become self-employed, you must register your business within the first three months of operation to the Inland Revenue and the Department of Work and Pensions. This is a very easy process and can be done over the telephone in about five minutes. You will then be sent a folder with all sorts of helpful information about being self-employed with a form to fill in and return about the nature of your business. Keep copies of any correspondence in one folder.

Speaking of stationery, the best plan is to keep a lever arch file for letters, another for receipts and have an up-to-date folder on your computer, or on paper, that details all your visits and mileage. Make sure you back it up each month, too.

Receipts

The best rule of thumb with receipts is to keep everything that is anything to do with your business. If, for example, you go to the supermarket and buy some things for your home and some things for your business (coffee or paper, say) then mark which things are for your business as soon as you get home and before you put the receipt in the file as you’ll never remember later. When buying online, you can keep a folder in your email that keeps receipts and then print them out at a later date with lots on one page to save wasting paper. Remember that you only need to keep self-employment paperwork for the last five years.

Invoices

You must keep an up to date record of what invoices you have sent out and what has been paid. Be careful to have the details of your VAT status carefully marked on your invoices, as well as your payment terms. An important clause to include is that your goods remain your property until full payment is received. Ask your account for official advice on this matter. It is always worth cross-referencing your invoices with payments received to ensure all the details are correct.

Mileage

There is no point thinking that you will remember all the business journeys you have done when you come to doing your tax return. It is far better to have a little notebook or online spreadsheet where you document each journey and its mileage. Even if you just write the starting point and the location you’ll have something to work with.

Business Development Information

Writing down the client’s details when you note the mileage is also worth doing as it helps to be able to build up a picture of what business development journeys are worth the effort. This is a key part of your self-employment business in that there is no point spending a fortune on visiting a potential client hundreds of miles away when there may be potential business far closer. Furthermore, you do not want to be spending money on client entertainment when you are not winning their business.

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