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Start up Series: Maintaining & Keeping Business Records

Welcome to the fifth blog in our start up series, this week on the importance of maintaining business records. To read earlier blogs in the series click here.

As a business owner you are required to keep various records relating to the activities of the business. It can be daunting to know what business records you need to retain and how long you should keep them. The HMRC requirements relating to business records differ depending on whether you are a sole trader or a limited company, and whether or not you are VAT registered. Depending on your business activity and sector there may be other records you are required to keep up to date. You may also be required to comply with data protection regulations (set out in the General Data Protection Regulations (GDPR)) regarding how you handle and store personal data.

Types of business records

The type of basic records you should retain as a small business owner include; sales and purchase invoices, details of other business income and business expenses, bank statements, mileage records and details of any capital asset purchases and related loan or leasing arrangements. If you have employees you are also required to retain HR and payroll records. VAT registered businesses need to keep supporting evidence to support figures recorded in their VAT return including VAT receipts for all expenses on which input tax has been claimed. Other records that a business should retain include details of insurances, licences and lease agreements. We are always happy to run through this in more detail with new business owners and clients.

Some smaller businesses may not keep accounting records, or may engage an accountant to prepare them. Most businesses keep accounting records which may be manual, on spreadsheet or electronic using an accounting software application. With the advent of Making Tax Digital the emphasis is very much on all businesses keeping reliable records in a digital form. There are many advantages to a system of this kind and would be pleased to assist you with this. Contact Us

Sole traders

If you are self-employed, and obliged to submit a self-assessment tax return, you must keep your tax records for at least five years after the 31 January submission deadline of the relevant tax year. For example, if you submit your 2018-19 tax return online on or before 31 January 2020, you must keep your records until at least the end of January 2025. Records for this purpose include those relating to personal income etc. If you send your tax return more than four years after the deadline, you will need to keep your records for fifteen months after you submit your tax return.

If you keep your tax records on a computer, make sure you have sufficient backups of your data to meet these requirements. If you change software during the record retention period, you may need to print relevant reports if you are unable to maintain access to data backups.

Limited companies

If you run your business as a limited company you must keep records for six years from the end of the last company financial year they relate to, or longer if:

  • they show a transaction that covers more than one of the company’s accounting periods,
  • the company has bought something that it expects to last more than six years, like equipment or machinery,
  • you sent your Company Tax return late, or
  • HMRC has started a compliance check into your Company Tax return.

If you are not in business, the minimum period is 22 months after the 31 January filing deadline for that tax year and at least 15 months after filing if the return was filed late.


The new data protection regulations require that you don’t keep the personal data of your customers, staff or other contacts when they are no longer required. It applies to all personal data and you are required to have a lawful basis for processing data and are able to document it – keeping data ‘just in case’ is not enough of a reason. Reasons for processing and storing data can include having the person’s consent, a contract or having a legal obligation to hold it.

Keeping personal data electronically or in dusty boxes indefinitely is no longer an option – you potentially risk heavy fines if you do. Many electronic document management systems now have a filter process that will help you manage this search and destroy requirement. As for the storage boxes, you will have to resort to a more hands on approach.

For more information on GDPR read our earlier blogs on the topic, click here  and here.

DNG Start up Series

DNG offer a full range of services to new start up, and established businesses in the Northampton and Daventry areas. For more information on the services we provide click here and contact us  today to discuss what we can do for you!

Over the past few weeks we have published a number of blogs focussed on start up businesses. These include blogs on topics such as; writing a business plan, how to decide on what business structure is best for you, the benefits of engaging an accountant and more. To read the earlier blogs in the series click here. Next weeks blog will all about tax small businesses are required to pay. Keep visiting our blog pages and social media pages for essential business news and information.

Ian Lowry



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