Keeping records

Brighter

Hi all I run a small handyman/ gardening business. (Sole trader)
Looking for a little guidance as to whther I am keeping my records correctly and whether you think I need more.
I use my private vehicle (my only vehicle) and insure it for business use.
I have two separate accounts, one is my personal account and another which is for purely for money I have earnt from my jobs. When I need money I simply transfer funds from my business account to my personal. Is this okay to do?
After every job I create an invoice, that then either gets sent to the customer for payment via bank transfer, cheque or cash. Once the customer has paid I make a note on the bottom of the invoice how they paid and what date they paid.
Sometimes customers pay cash and do not want an invoice..in this instance I still create an invoice for myself and file it. When I go to the bank to pay in the cash, I keep the paying in reciept and that is the kept with the relevant invoice/ invoices.
I keep reciepts for my expenses, although this is very minimal, it may be a new pair of work gloves or strimmer line, or a new tool and these get all put into a folder.
When I need car insurance or fuel for my car, I tend to just pay using my personal account and if I don't have enough in the account I transfer some funds over.
Recently I have also been selling some personal items online. When people buy they pay me PayPal into my personal account, as this is just stuff from home I don't need anymore and nothing to do with my gardening business. I take this is the correct way of doing things?
Any help or guidance would be greatly appreciated.
Thankyou.

Pennywise

Yes, that all sounds about right.

pramsay13

Sounds not too bad. Is this your first year trading and are you submitting a self-assessment tax return?

For your car it is not exclusively for your work, so you will have to allocate a proportion of vehicle expenses for using it for your business, the easiest way is to note exactly how many miles you do for work and get tax relief per mile travelled.

Savvy_Sue

pramsay13 wrote: »

For your car it is not exclusively for your work, so you will have to allocate a proportion of vehicle expenses for using it for your business, the easiest way is to note exactly how many miles you do for work and get tax relief per mile travelled.

And it's worth saying that google maps or similar is your friend in this situation, it sounds as if you're keeping good records of when you've done which jobs so you should be able to work out your business mileage from that.

Also worth noting that selling personal items isn't liable to tax. If you buy with the intention of selling, it is liable to tax. And it's possibly liable to tax if you sell something you originally bought for the business but replace, eg sell old secateurs because you've bought a better pair.

Aquamania

Regarding car expenses, there are two approaches that can be used as explained here:

http://taxaid.org.uk/guides/information/a-starting-point-for-the-self-employed/self-employed/using-your-private-car-for-work

Whilst there is no 'one size fits all' approach, and ultimately it is down to the OP, it is often the case that option 2 (the 'simplified expenses' rules, i.e. a fixed mileage allowance for all business mileage travelled) is often the approach recommended to most here in your situation ... if for no other reason than it is simple.
(and in many cases it is the better cost effective approach too)

Brighter

Hi all
Thanks for your feedback. It's good to know I'm doing things ok. It is my first self assessment so just wanted to make sure I'm going in the wrong direction.
Thanks for the advice re vehicle mileage. One question which may seem silly, is it a requirement for me to use this as an expense? I.e if I can't work out my business mileage and not it include it in this year's expenses am I ok to do this? Or do I have to build law include it?
Thanks

pramsay13

It's not a requirement to claim for vehicle expenses.
You do have to register as self-employed with HMRC and register for self-assessment.
If you worked before April 2018 and are submitting for the 2017 / 2018 tax year the deadline for online submissions is January so you will need to get a move on.

Slinky

Brighter wrote: »

Hi all
Thanks for your feedback. It's good to know I'm doing things ok. It is my first self assessment so just wanted to make sure I'm going in the wrong direction.
Thanks for the advice re vehicle mileage. One question which may seem silly, is it a requirement for me to use this as an expense? I.e if I can't work out my business mileage and not it include it in this year's expenses am I ok to do this? Or do I have to build law include it?
Thanks

Why would you not want to work it out and include it? It's money you'll be due. A 20 miles trip is £9 of expenses you can claim and not be taxed on. It all adds up to a significant amount quite quickly.

Annisele

Slinky wrote: »

Why would you not want to work it out and include it? It's money you'll be due. A 20 miles trip is £9 of expenses you can claim and not be taxed on. It all adds up to a significant amount quite quickly.

If OP's earnings are low enough that they won't be paying tax anyway, I could absolutely understand not bothering to claim business mileage. Otherwise, if they don't claim they're just leaving money on the table.


But regardless of OP's earnings they don't have to claim business mileage if they don't want to.

Aquamania

Annisele wrote: »

If OP's earnings are low enough that they won't be paying tax anyway,....

If the OP is not earning £12k before expenses, probably best to give up