Accounting Records: Complete Guide for UK Businesses

​Why your accounting records matter

When you run a business, keeping accurate and complete accounting records is absolutely vital.

Whether you’re a sole trader, partnership or limited company, these records provide the foundation for everything from assessing profit and loss, to filing tax returns and meeting regulatory requirements.

Without proper records, you risk under- or over-paying tax, having queries from HM Revenue & Customs (HMRC) and even penalties.

1. What counts as accounting records for the self-employed?

If you’re self-employed or a partner, your accounting records need to include all your business income and all your allowable business expenses.

This means keeping records of:

Having these accounting records ensures you can calculate your profit or loss and support the figures you report in your tax return.

It also helps you claim reliefs properly and avoid missing legitimate deductions.

2. Accounting records when operating a limited company

When you’re operating as a limited company, the requirements around accounting records are stricter. Y

our records must cover:

Infographic explaining why self-employed individuals should open a separate business bank account, highlighting benefits like clearer tax reporting, professional credibility, and simplified expense tracking.
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  • income, expenditure, assets owned and debts owed

  • stock and stock­takes (if you hold inventory)

  • details of goods bought and sold (including who you bought from and sold to, unless you’re purely retail)

  • company-specific records such as directors, shareholders, minutes of resolutions and the register of persons with significant control (PSC)

Under the Companies Act 2006, every company must keep adequate records “that are sufficient to show and explain the company’s transactions” and to give a “true and fair view” of the company’s financial position.

3. Digital record-keeping & the evolving rules

The world of accounting records is changing. Digital record-keeping is already mandatory in many cases.

For example, VAT-registered businesses whose turnover is above the VAT threshold must comply with the Making Tax Digital (MTD) requirements for VAT.

From 1 April 2027, the filing of company accounts with Companies House will require software filing only, which underscores the importance of maintaining your accounting records in suitable digital form.

That means now is the time to ensure that your record-keeping systems are up to date, that your accounting software (or spreadsheets) capture the right information and that your team understands how to maintain proper digital accounting records.

4. How long should you retain accounting records?

Retention periods for accounting records depend on your business structure:

  • For a limited company, you must keep your accounting records for at least 6 years from the end of the last financial year they relate to. In certain situations (e.g., fixed assets lasting more than 6 years, transactions spanning periods, late file submission or HMRC compliance check) you may need to keep them longer.

  • For self-employed individuals or partnerships, guidance suggests keeping accounting records for at least 5 years after the 31 January submission deadline in the relevant tax year.

Retaining good accounting records is not just about compliance – it also gives you clarity on your business performance and supports you in case of a tax enquiry.

5. What happens if you don’t keep proper accounting records?

Failing to maintain accurate accounting records can bring serious consequences.

The law states that if company directors fail to keep adequate records, they could be fined (for example up to £3,000) or in extreme cases disqualified.

Even for self-employed individuals, incomplete or missing accounting records mean you may not be able to justify your figures to HMRC, potentially resulting in additional tax, interest and penalties.

Good records protect your business and help you sleep easier.

6. Practical tips to improve your accounting records

Here are some actionable ways to strengthen your accounting records:

  • Keep all receipts, invoices, bank statements and till rolls — these underpin your income and expense entries.

  • If you hold stock, track your purchases, stock‐takes and stock values at year end.

  • Use accounting software or spreadsheets to record transactions regularly — don’t leave everything until year‐end.

  • For digital records: ensure the system captures all details (amount, date, description, parties involved) and you retain a readable version for the required period.

  • Maintain a separate business bank account (especially for limited companies) so your accounting records clearly distinguish business and personal funds.

  • Review your accounting records periodically (e.g., monthly or quarterly) so you spot errors, omissions or issues early.

  • If you change software or go cloud-based, ensure that your previous records remain accessible and backed-up — you still need them for whatever retention period applies.

​7. How Trueman Brown can help

If you want expert support in maintaining robust records, we at Trueman Brown are ready to help. Whether you’re starting up, managing steady growth or preparing for a compliance check, we offer guidance, system setup, regular reviews and support with digital record-keeping.

Contact us:

Let us work with you to ensure your records are fit for purpose, compliant with the latest rules and structured in a way that supports your business growth.

FAQ – Accounting Records

Q1: What exactly must be included in accounting records?
A: For a company, your accounting records must show all money received and spent by the company; details of assets and liabilities; stock if applicable; goods bought and sold and who you bought from and sold to (unless purely retail).

Q2: Can I keep accounting records electronically?
A: Yes. Records can be kept digitally or on paper, provided they capture all required information, are accessible and readable. With upcoming rules (e.g., software-only filing from 2027 for Companies House) it’s increasingly important to keep digital accounting records.

Q3: How long do I have to keep accounting records?
A: For a limited company: at least 6 years from end of the last relevant financial year, and possibly longer if circumstances require. For self-employed/partnerships: at least 5 years after the tax year’s 31 January deadline (often longer in practice).

Q4: What if I lose or destroy some accounting records?
A: If your accounting records are lost, stolen or destroyed you must do your best to recreate them, inform the relevant tax authority (HMRC) and keep any remaining evidence. It’s a risk area, so keep backups and consider secure storage.

Q5: Is using accounting software enough to satisfy record-keeping?
A: Using accounting software is fine — but it’s not enough on its own. The accounting records you keep via software must still capture the required information, be accessible, backed-up, and you must retain supporting documentation (invoices, receipts, bank statements). Regular review and oversight are important.

Q6: How does making Tax Digital (MTD) affect my accounting records?
A: MTD obliges certain businesses to keep digital records of VAT, and in future for income tax and corporation tax. That means your accounting records must be organised in a digital format compatible with submission systems. It’s therefore a good time to review your record-keeping processes.

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