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How Do I Keep Track of Income and Expenses When Self-Employed?
Less catching up. Clearer figures when you need them.
Keep income, expenses and receipts together, then produce quarterly or end-of-year reports from your recorded figures.
IN THIS GUIDE
The best bookkeeping system is the one you can keep using after a long day at work. Start with clear entries, somewhere to keep the evidence and a regular check that nothing has slipped through.
Record income when it happens
For each customer payment, keep the date, amount, customer or job reference and payment method. Include cash as well as bank transfers and card takings. Match the payment to your invoice or job diary so you can see what is paid and what is still outstanding.
If you use cash basis, income is generally recorded when money is received and expenses when paid. Traditional accounting uses different timing rules. Choose the treatment that applies to your business and use it consistently.
Record expenses before the receipt vanishes
For a purchase, keep the date, supplier, amount and a description you will recognise later. Save the receipt or invoice alongside the record, or give it a reference that points to the right file.
A mixed purchase needs a clear split. If a £50 receipt includes £35 of business supplies and £15 of personal shopping, do not enter £50 as an allowable business cost. Keep a note explaining the £35 business amount.
Use the allowable expenses guide to check common costs, and our receipt evidence guide for supporting documents.
Review regularly
Compare the entries with your payment records and supporting documents. A receipt, a card entry and a bank statement can all refer to the same purchase. Record the cost once and use the others as evidence, rather than treating each document as a new expense.
- Check that customer payments are complete, including cash.
- Look for missing receipts and supplier invoices.
- Investigate duplicate-looking amounts before removing anything.
- Keep personal spending, drawings and transfers out of trading costs.
- Write down anything you still need to resolve.
A simple worked example
A cleaner receives £150 in cash and £250 by bank transfer. They buy £40 of business supplies and pay £20 of business insurance. With no other entries or adjustments, that gives £400 income, £60 costs and £340 before tax.
If they later bank £100 of the cash, the customer income is still £400. The bank deposit moves money already received; it is not another cleaning job. Keep a note matching the deposit to the cash takings.
For more trade-specific examples, visit TaxSnapper for cleaners. Other professions can start with Who is TaxSnapper for?
Keep it simple
A spreadsheet may suit you if you are comfortable checking formulas and keeping documents separately. An app can help when you want to enter a payment or save a receipt while you are out. Whatever you choose, make sure the records are backed up and easy to retrieve.
TaxSnapper’s income and expense tracking keeps recorded transactions together without a bank connection. You still need to check that entries and categories are correct.
Use checked entries for your reports
Review the records before producing quarterly reports or an end-of-year Self Assessment report. Check the dates, totals and any outstanding questions. A report is useful because the entries behind it are complete, not simply because it looks tidy.
TaxSnapper provides records and exports; it does not submit your tax return or MTD updates directly to HMRC. Explore the Bookkeeping guides for more help.
Useful HMRC guidance
Your records, ready for the next step.
Keep the day-to-day entries in order so there is less to sort out when reporting comes round. Explore the reports and check the examples before choosing what you need.
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