Small Business Guides / UK small business compliance

What Records Must a UK Business Keep?

Keep enough evidence to explain what the business earned, spent, owns and owes. Your legal structure and registrations determine the detailed requirements.

Start with the transaction trail

Keep sales invoices, receipts, purchase invoices, bank statements, payment records and evidence behind significant adjustments. Record business expenses when they occur. A bank statement shows money moving, but may not explain what was bought or why it was a business cost.

Sole traders and limited companies differ

Self-employed tax records generally need to be retained for at least five years after the relevant 31 January filing deadline. Company accounting records generally need to be retained for six years from the end of the financial year concerned. Both rules have circumstances requiring longer retention.

Companies also need company records, such as relevant decisions and ownership information. Payroll, VAT, employment, regulated activities and disputed transactions can bring separate requirements. Do not apply one retention period to every document.

A simple filing system

• One folder for sales, with unique invoice numbers.
• One for purchases, with supplier and date in the filename.
• One for banking and reconciliation.
• One for tax returns, calculations and submission receipts.
• Restricted folders for company and people records.

Make the records usable

Reconcile the bank regularly. Record why an invoice was credited, which payment settled it and where supporting paperwork is stored. Back up the records and check that you can restore them. Limit access to personal information and delete it when there is no lawful reason to retain it.

At month-end, choose three transactions and trace each from source document to accounts and payment. Gaps in that small sample often reveal a process worth fixing.

Use the bookkeeping checklist, expense guide and Document Vault to keep evidence together.

Explore Polar’s business tools or the connected business software for the next practical step.