When you run any business whether as a sole trader or limited company, you are legally required to keep business records to support your tax returns. However if you are VAT registered then you are legally required to keep some special records for VAT.
Special Records for VAT
There are two pieces of information you should make sure you are maintaining as part of your business records and bookkeeping when you’re VAT registered:
- A VAT account which records on an ongoing basis VAT you need to pay and VAT you need to reclaim, so you know at any one point in time what your VAT liability is, not just at the end of a VAT quarter;
- VAT Invoices for all sales you make.
Other Business Records You Should Keep
In addition you should be keeping other business records including:
- Bank statements
- Customer Invoices
- Supplier invoices
- Cash expense forms & receipts
- Business credit card statements & receipts
- Mileage claims
- Statements detailing your online earnings like eBay Statements, Paypal account and Etsy income
How Long Should You Keep Your Records
You should keep your records for 6 years. Fortunately you can now keep your records and business receipts digitally, which avoids you need to store paperwork for years at a time.