Idiots guide to keeping self employed records?

[s-rly]

In simple terms..what exactly do i need for self employment? In terms of records i need to keep?

Any help would be great

 

[Newchodge]

1. Income, by client/job
2. Expenses, by client, job
3. Overheads
4. Drawings

All receipts and invoices in and out These support the figures in 1,2 and 3 above

 

[s-rly]

Okay...
My expenses will be minimal..so what if i dont spend anything for a job??

I have all invoices...
I also have reciepts for things ive bought (like gloves and a brush, new work clothes)

Do i need to keep.a.monthly log off whatbive earnt?

 

[Scalloway]

You should record income as it comes in. When you bank it you should keep a note of what you banked. If you are paid cash you should note payments made. And remember if you are unlucky enough to be investigated by HMRC their default position is that all money you get is taxable income unless you have evidence to show otherwise.

HMRC guide to record keeping.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/377656/rk-bk1.pdf

 

[s-rly]

Thankyou
I'm still a bit confused as to what I should and how I should be keeping records.
I have one bank account that everything goes into and goes out of...
Saying I get paid cash one week but wait to cash the money until the end of the month along with other cash I have earned do I just keep a note of how much I put in and what date?

Also invoices...I give the customer a copy and I keep a copy and write at the bottom when it was paid and how it was paid? Then file it?

If I buy say new gloves that I need for my work...I keep the receipt and put the details into some kind of spreadsheet?

At the moment I have work with one person who is going to pay me every week for my services in that week. So I invoice him every week and he usually pays me that week. Is that ok?

Do I need to keep monthly logs of what I've earned?
If so then how do I do that when the month change falls mid week?

Apologies for all the questions

 

[14Steve14]

Just make sure you are actually self employed first.

You need to keep a record of everything you buy to run the business, and everything you sell. You can store all that information in a simple spreadsheet, or you can use a free accounting software package of which there are many good and bad ones. You can also buy accounting books from large stationers and manually enter in your costs and expenses.

What I would do is to contact an accountant and have a free introductory meeting with them. Most do half hour sessions and they will explain all you need to do in the hope of retaining you as a customer.

When you come to fill out your tax return at the end of the tax year, you will need income and expenditure totals for the year as a minimum. So thats what you should be aiming for.

 

[s-rly]

Thankyou...I have constant work with this guy and I aim to do grass cutting and other garden work for other people..so I guess I'm self employed?

I registered the business yesterday but I started doing work for this guy a few months ago..on and off...that is why I have dated the start up a few months ago a few times but then I did nothing until a week or so ago where Now i have been asked to do a lot more work. However those 3/4 times I didn't invoice him, what do I do there?
I have a file for invoices and a file for any receipts I have relating to buying things I need (like, gloves or equipment) but I mostly have what I need already...(lawn mower, brush etc) so my expenses will be minimum.
Do I have to keep a monthly spreadsheet of what I earn? Or can I just enter it everytime I get paid?

And what happens with the money...I plan to wait until the end of each month and put all money I earned from that month in at the same time..can I do that?

 

[Newchodge]

It is best to keep a spreadsheet which you update each time you get paid or incur an expense. It does not need monthly totals, but it would be a good idea to keep a running total so you can see how much you are earning.

Don't forget to include all expenses, not just things you buy. How do you get to the jobs you do? Do you use your phone for the business? Have you got any business cards or flyer printed?

It is up to you when you put the cash in the bank, as long as you record what cash you have received.

When you say you registered the business yesterday, do you mean that you told HMRC that you are now self employed?

 

[The Byre]

It sounds as if you need to read 'Starting a Business for Dummies' by C.Barrow!

https://www.amazon.co.uk/Starting-Business-Dummies-Colin-Barrow/dp/1118837347

 

[MyAccountantOnline]

Have a read of this.

 

[MyAccountantOnline]

It is best to keep a spreadsheet which you update each time you get paid or incur an expense. ....

I think spreadsheets are a horrible way to keep records. I dont think I've seen one yet which hasnt had some errors in and I've been an accountant for a very long time! Its also a bit like re-inventing the wheel when you can get good free basic software which does a better job http://www.vtsoftware.co.uk/cashbook/

 

[Newchodge]

I think spreadsheets are a horrible way to keep records. I dont think I've seen one yet which hasnt had some errors in and I've been an accountant for a very long time! Its also a bit like re-inventing the wheel when you can get good free basic software which does a better job http://www.vtsoftware.co.uk/cashbook/

I agree, but the OP appears to be resistant to even entering details into a spreadsheet, so a proper accounting package may be pushing things a bit at first.

 

[MyAccountantOnline]

I agree, but the OP appears to be resistant to even entering details into a spreadsheet, so a proper accounting package may be pushing things a bit at first.

Unfortunately people like the OP arent going to have any choice soon.

 

[Paul Norman]

Keeping precise business records is important. And rightly so.

If you are uncertain about how to do so, my personal recommendation would be to engage an accountant, who will explain what records you need to keep and how. Or, even, to engage a bookkeeping service.

The reality is, the risks of not getting this right are that you get fined. Lots. And it is hard to explain how to do it here, beyond explaining that you must keep precise details of all the money you receive into the business, and all the money you spend in the course of running the business. My opinion is that it is good practise to run a separate bank account for the business, too, and it certainly would save time in the event of an HMRC inspection.

 

[paulears]

I don't quite understand. If the business is very simple, then you could even go and buy one of those old accounts books if they still make them - were they called simplex D? HMRC are only really interested in how much you earn - which is really what you take from your customers, less what it costs you to do the job - and there are always expenses. You then use these figures on your tax form. If you really are no good with paperwork, then an accountant could sort it all out for you - over the years my accounts have got more complicated, and I do the bookkeeping element and then give the results to the accountant, who now charges me a fair amount, but no longer a tiny amount. He does, however, seem to minimise the amount I earn and saves me far more than he costs.

The idea for a free chat is well worth it - the result might simply be a very simple system easy for you to work. After all - HMRC just want evidence of what you earn and what you spend. A pile of receipts and a pile of invoice copies is about as simple as it can get.

 

[Scalloway]

The Simplex D is still available

http://www.postofficeshop.co.uk/record-books-and-pads/simplex/d-book/