It is essential that you 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 will be of real assistance to your accountant if you have kept good records, not only of your sales and purchases, but also of any goods and materials stolen or wasted, lengthy periods when you have been prevented from working (for example by illness or very 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 have quoted to potential customers
- you must make sure that you can start a new job when you have said that you will
Make sure that you note down all income the business receives, and all the money that is spent, even if it is 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 is 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.
Safety and accident records
Even if you take every precaution to reduce workplace and site risks, you need to keep a record of any reportable injuries - for example an accident involving machinery - and dangerous occurrences that happen. These could involve you, your staff, other contractors, or members of the public. 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 routine maintenance carried out on tools and equipment, and safety training given to staff.