Self-employed records
Discussion
I became self-employed in september, and have been keeping basic records - mainly what I worked, when, how much I was paid and what I got for travel expenses, reimbursements, etc.
What I haven't done is kept any records or proof related to expenditure.
My income isn't going to go over the tax threshhold and I have a small earnings exception for my NI.
Is it going to cause problems that I don't have any records of mileage or receipts for petrol? I'm not going to be trying to get any tax relief from them, as I wont be paying any tax.
does that make any sense?!
What I haven't done is kept any records or proof related to expenditure.
My income isn't going to go over the tax threshhold and I have a small earnings exception for my NI.
Is it going to cause problems that I don't have any records of mileage or receipts for petrol? I'm not going to be trying to get any tax relief from them, as I wont be paying any tax.
does that make any sense?!
Yes - it is a legal requirement to keep adequate records to support whatever information you enter on your Self Assessment tax return. Failutre to do so is a Criminal Offence.
However, you may have more records than you think. Even if you have not kept every last voucher and receipt, adequate supporting evidence can also be obtained from Cheque Stubbs, bank statements, credit card statements etc. If you have rashly disposed of bank or credit card statements, you should be able to obtain duplicates.
I was concerned about the expression "expense cliams" used in your post. Self Employed individuals don't make "Expense Claims". They issue invoices for the work they and to cover their business costs. They should not be making separate "expense claims". That is something employees do.
However, you may have more records than you think. Even if you have not kept every last voucher and receipt, adequate supporting evidence can also be obtained from Cheque Stubbs, bank statements, credit card statements etc. If you have rashly disposed of bank or credit card statements, you should be able to obtain duplicates.
I was concerned about the expression "expense cliams" used in your post. Self Employed individuals don't make "Expense Claims". They issue invoices for the work they and to cover their business costs. They should not be making separate "expense claims". That is something employees do.
I would also recommend having a word with your accountant (I presume you have employed one?).
I set up a spreadsheet for monitoring all my income and expenditure. Once a month I load:
- Recipts
- Bills (e.g. mobile phone)
- Cross-reference credit card bills
- Cross-reference and mark up bank statements.
then file off all the paperwork by category (categories which I agreed with my accountant would be used in my accounts)
Once a month means:
- you keep on top of it all
- you remember things such as that train ticket you bought
- you have an idea of the tax liability you are building up
- when you do your end of year accounts, it's a heck of a lot easier.
As Eric says, you will have more evidence than you might think, and you should be checking your cards and bank statements anyway.
If you want, I could send you a copy of my spreadsheet, purged of data, to give you a starting point.
I set up a spreadsheet for monitoring all my income and expenditure. Once a month I load:
- Recipts
- Bills (e.g. mobile phone)
- Cross-reference credit card bills
- Cross-reference and mark up bank statements.
then file off all the paperwork by category (categories which I agreed with my accountant would be used in my accounts)
Once a month means:
- you keep on top of it all
- you remember things such as that train ticket you bought
- you have an idea of the tax liability you are building up
- when you do your end of year accounts, it's a heck of a lot easier.
As Eric says, you will have more evidence than you might think, and you should be checking your cards and bank statements anyway.
If you want, I could send you a copy of my spreadsheet, purged of data, to give you a starting point.
wd* said:
I'm not going to be trying to get any tax relief from them, as I wont be paying any tax.
Just spotted this bit. You do know that if you made a loss in the last Tax Year, you can roll that over against your profits next year? So even if you haven't billed a penny or made a single sale, it's still worth getting your costs of business sorted.
smallend,
I'll get to work on it tomorrow, but I can't send attachemnts by PM. Would you PM me with your email addy, please?
Eric Mc said:
In fact, if you have made a tax allowable trading loss in your first year of "trading", you can also offset the loss against your "other income" in the same tax year. This means you could get back some of the PAYE you paid - if you had any salary income in that year.
Or carry it back to the previous tax year, when you may have had substantial tax liability under Paye.
Eric - I don't claim for expenses, I supposed I worded it wrong. I get a travel allowance for some calls.
Maybe it would help if I put it into context:
I do mystery shopping, and get paid a specified fee per call. On top of that, for some calls, I also get a travel allowance, and for other calls, if I have had to make a purchase, or send off receipts, I get a reimbursement for the cost.
I have kept a basic record of what I did, when, for which company and how much I was paid.
What I haven't kept a record of is mileage, though I could work that out. My only other expenditure has been buying a few document wallets from the pound shop - but again, I don't have the receipts.
I have received my tax return form this morning, and it is absolutely baffling!
And to whoever asked - no, I don't have an accountant.. I earn sub-£200 a month, so I didn't really think I could afford one!
Any more advice?
Maybe it would help if I put it into context:
I do mystery shopping, and get paid a specified fee per call. On top of that, for some calls, I also get a travel allowance, and for other calls, if I have had to make a purchase, or send off receipts, I get a reimbursement for the cost.
I have kept a basic record of what I did, when, for which company and how much I was paid.
What I haven't kept a record of is mileage, though I could work that out. My only other expenditure has been buying a few document wallets from the pound shop - but again, I don't have the receipts.
I have received my tax return form this morning, and it is absolutely baffling!
And to whoever asked - no, I don't have an accountant.. I earn sub-£200 a month, so I didn't really think I could afford one!
Any more advice?
ALL the income you receive - fees, allowances, expense claims etc are all treated as "Sales" for accounts and tax purposes.
Regarding Self Assessment, if your total "Sales" for the year ended 5 April 2006 are less than £15,000 per annum, you will only have to complete the small "Thee Line Accounts" section on Page 1 of the Self Employed Supplementary Pages.
However, all your non-Self Employed income will need to be returned in the other sections of the form.
E-Mail me if you would like a chat about how to tackle these issues.
Regarding Self Assessment, if your total "Sales" for the year ended 5 April 2006 are less than £15,000 per annum, you will only have to complete the small "Thee Line Accounts" section on Page 1 of the Self Employed Supplementary Pages.
However, all your non-Self Employed income will need to be returned in the other sections of the form.
E-Mail me if you would like a chat about how to tackle these issues.
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