It's essential to keep very good records of all your business transactions. This is important for several reasons:
- HM Revenue & Customs (HMRC) requires you to keep certain records for inspection for six years and may check your records from time to time as part of their compliance procedures. There is an HMRC guide to business record keeping for the self-employed on the Gov.uk website. The guide explains which records you have to keep, how long you have to keep them, and what to do if they get lost or destroyed
- if HMRC decides to investigate the business it'll be really helpful if you've kept good records - not only of your sales and purchases, but also of any lengthy periods when you've been prevented from working (for example by illness or bad weather) and so on
- you need to know how the business is doing at any time - well kept records will tell you this
- you need to manage your business. For example, account customers need to be sent invoices and reminders if any amounts become overdue
- you need to keep a record of amounts that you've quoted to potential customers
- you'll need to be sure that you and your employees turn up at the right place at the right time on the right day. You'll probably be booking out several jobs for each day, and your customers won't appreciate being kept waiting or being let down altogether - particularly if they've made special arrangements to be at home
If you do any subsidised Sky installations you'll need to keep the right records so that you can bill Sky correctly.
Make sure you note down all the income your business receives and all the money it spends, even if these are only small amounts. You should be able to show from your records how all income received by the business can be traced through until it's either spent or banked. Ask yourself if you would be satisfied that the records would reveal any dishonesty if they were written up by an employee.
Your accountant will be able to give you advice on how best to keep records. You might decide to go for a computerised system, which will help your accountant to draw up your accounts at the end of the year. Don't forget that under HMRC's Making Tax Digital (MTD) initiative you'll need to keep your VAT records digitally if your taxable turnover is above the VAT registration threshold. You can find out more about MTD on the Gov.uk website.
Safety and accident records
Even if you take every precaution to reduce workplace risks, it's wise to keep a record of any incidents involving staff. And you need to keep a record of any reportable injuries that happen, for example a ladder accident leading to an injury. There's more about incident reporting and record keeping on the Health and Safety Executive (HSE) website.
Keep a record too of other safety-related matters - for example safety training given to staff.