by Asim Abbas
11 November 2026 
Bookkeeping basics for small businesses in 2026
Bookkeeping basics for small businesses in 2026
Good bookkeeping is the foundation of accurate tax returns, healthy cash flow and stress-free deadlines. With Making Tax Digital, digital records are now a legal requirement for many businesses.
- Keep records of all income and expenses
- Sole traders keep records for at least 5 years after 31 January
- Companies keep records for 6 years
- A separate bank account saves hours
You don’t need to be an accountant to keep good books, but you do need a simple routine and the right tools.
This guide covers what records to keep, how long to keep them and how to make bookkeeping quick.
What records to keep
- Sales invoices and records of all takings
- Purchase invoices and receipts
- Bank and card statements
- Mileage logs and vehicle costs
- Payroll records, if you employ staff
- VAT records, if registered
- Asset purchases and sales
How long to keep them
| Business | Keep records for |
|---|---|
| Sole traders and partnerships | At least 5 years after the 31 January filing deadline |
| Limited companies | 6 years from the end of the financial year |
| VAT-registered | 6 years |
| Payroll | 3 years from the end of the tax year |
Keep them longer if HMRC is checking a return or you file late.
Self Assessment tax calculator
Estimate tax to set aside.
A simple weekly routine
- Photograph receipts as you get them
- Categorise bank transactions in your software
- Match payments to invoices
- Chase unpaid invoices
- Set aside money for tax, around 25% to 30% of profit is a safe guide for many
Mo runs a cleaning business with £55,000 turnover. He spent two days every January sorting a shoebox of receipts. Since switching to software with a bank feed and spending 20 minutes a week categorising, his MTD updates take minutes and his accountant’s fee went down because the records arrive clean.
Fixed-fee accountancy support
Transparent monthly packages for sole traders, landlords and limited companies. Fixed fees agreed upfront, VAT included.
Get a fixed-fee quoteCall 0161 531 4179Choosing software
If you’re in Making Tax Digital for VAT or Income Tax, you need compatible software, or a spreadsheet with bridging software. Look for bank feeds, receipt capture, invoicing and MTD submission. Most products charge a monthly fee, which is an allowable expense.
Common bookkeeping mistakes
- Mixing personal and business spending
- Missing cash sales
- Treating loan repayments as expenses
- Forgetting small recurring costs
- Not reconciling the bank balance
- Losing receipts for larger purchases
Extra rules for limited companies
Companies must keep statutory records, such as registers of directors and shareholders, minutes of dividends, and a director’s loan account. Dividends need board minutes and vouchers, and there must be enough profit to pay them.
See HMRC’s guidance on keeping records, our cash basis guide and our bookkeeping services.
What should I do next?
Keep spending separate.
With a bank feed.
20 minutes is enough.
Frequently Asked Questions
How long should a sole trader keep records?
At least five years after the 31 January filing deadline for the tax year.
Do I need a business bank account?
Sole traders don’t have to, but it makes bookkeeping much easier. Companies need one.
Can I use a spreadsheet?
Yes, but for MTD you need bridging software to submit.
Do I need to keep paper receipts?
Digital copies are fine if they are clear and complete.
How much should I put aside for tax?
Many small businesses set aside 25% to 30% of profit, but it depends on your income.
Need help with this? Wingate Accountants offers fixed-fee online accountancy support across the UK. Call 0161 531 4179 or request a quote at wingateaccountants.co.uk.
About the Author
Asim Abbas
I’m Asim Abbas, founder of Wingate Accountants and a Chartered Certified Accountant. I help sole traders, landlords and directors stay on top of their tax with fixed fees and plain-English advice.
