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Keeping finances and records

Keeping accurate records of your financial transactions is a legal requirement for every business owner. There is a lot of help available to you including online self help from HM Revenue and Customs.

Why do I need to keep accurate financial records?

Keeping accurate records of your financial transactions is a legal requirement for every business owner. It is required by HM Revenues & Customs (HMRC) for you to keep accurate records to ensure that the correct amount of tax and National Insurance (NI) contributions are made. HMRC has the authority to request copies of all records you have kept for audit purposes.

When you become self-employed it is your responsibility to keep accurate records in order to complete your annual tax return.

Can you help me with my finance and record keeping?

Yes, and business advice is free to any East Riding of Yorkshire resident or business based in the East Riding.

We can give advice in relation to:

  • keeping financial records
  • what records you need to keep
  • why you need to keep financial records
  • different methods of record keeping
  • personal survival income (your overall expenditure including what you need to live personally in addition to running your business)
  • cash flow forecasting (planning your business's future cash requirements)

You can learn more by taking the HMRC online learning course or getting in touch with us. 

HMRC learning course (external website)

You can contact a business adviser with an enquiry or arrange a confidential one to one appointment using the online form (please note:you will need to supply an email address in order for the adviser to reply to you):

Contact a business adviser online

What tax and national insurance will I need to pay?

The classes of tax and national insurance that will apply to your business will depend on the type of business you set up.  

Tax

As a business you could be liable to pay tax on any profits made.  Tax is a huge area with much dependency on personal circumstances and the levels of business activity you are likely to be involved in.    

For more details such as information about tax returns, tax allowance and tax codes you can visit the Gov.uk tax help page:

GOV.uk – Tax help (external website)

You can also contact a local business adviser who will be happy to guide you to the right source of correct information:

You can find out more about tax on Gov.uk. HM Revenue & Customs (HMRC) is the government department responsible for the collection of tax:

GOV.uk – HM Revenue and Customs (external website) 

National Insurance (NI)

National Insurance (NI) is a system of contributions paid by both employed and self-employed people (trading as sole traders or partnerships) that qualifies them for certain state benefits and pensions such as the State Pension, Maternity Allowance and Incapacity Benefit. 

There are 6 types of National Insurance Classes which you can read more about on Gov.uk:

GOV.uk – National Insurance Classes (external website)

Don’t need to pay contributions?

Even if you don’t need to pay contributions, some individuals (whether employed or self-employed) choose to pay voluntary National Insurance Contributions (NIC)s, for example to protect your State Pension if you haven’t otherwise made enough contributions.

Read more about the benefits of making voluntary contributions:

GOV.uk – Voluntary National Insurance contributions (external website) 

Employed and self employed

If you’re both employed and self-employed at the same time, your employer will deduct your Class 1 National Insurance from your employed earnings, and you have to pay Class 2 and Class 4 payments for your self-employed work.

How much you pay depends on your combined income from all your jobs. HM Revenue and Customs (HMRC) will let you know how much National Insurance is due after you’ve filed your Self Assessment tax return:

GOV.uk - self-assessment tax returns (external website) 

How can I find out more about finance and record keeping?

To find out more about finance and record keeping by contacting a local business adviser, at a local business centre:

You can also take the learning course below.

HM Revenues & Customs (HMRC) e-learning 

If you've just started in business or become self-employed, and have a lot of questions about income tax, national insurance, business records or expenses, HMRC's online resources might be for you.  They explain and guide you through everything you need to know to get started.

HMRC provide a range of online videos and live webinars:

GOV.uk - HMRC webinars, email alerts and videos (external website)