Books and records

What accounting records you need to maintain as a sole trader are not prescribed. However, the better your records are maintained, the lower the accountancy fees will be for producing year-end accounts. If you are registered for VAT, your accounting records should be kept for six complete years; otherwise, we recommend you keep three years’ records. Any payroll records must be retained for six years.

As a minimum, the accounting records you should maintain are:

• Unless you operate on a pure cash basis, a record of sales showing the date of the invoice, an invoice number, the customer’s name, the net amount, the VAT amount and the gross amount. If possible, the record should also state when each invoice was paid and there should be space for any comments in case an invoice is not paid in full;
• A file of sales invoices, in numerical order. Sales invoices must bear at least the business name, its address and, if relevant, the VAT registration number;
• A “cash book” in which you would record amounts paid in to the business bank account and amounts paid out. The amounts paid out should include any direct debits and standing orders going through the bank account as well as cheques. Each payment should record the date paid, the cheque number (if applicable), a cross-reference to the supporting invoice, the gross amount paid, the input VAT, the net amount paid, and should analyse the net amount paid according to the nature of the expense. We can advise on the analysis required, which will vary according to your business
• A record of petty cash amounts paid out, if any;
• Wages records;
• Copy VAT returns and the supporting workings;
• Files of purchase invoices;
• If relevant, stock records.

If you prefer to maintain your accounting records on computer we can advise on the purchase and setting up of a suitable program.

Alternatively, you can use our on-line program or our outsourcing service.