As a self-employed person, record keeping is an essential part of our yearly routine to make sure our business runs by the book in the eye of the taxman! To follow up our article about Claiming Expenses for Music Teachers, we are going to discuss the importance of record keeping.

This article has been written for Rockschool on behalf of MGR Music by Leigh Fuge

When you submit your tax return at the end of the financial year, you should have a collection of records to back up the claims you are putting forward. The records you keep will help determine a number of things such as your tax amount owed, the expenses that are deducted from your tax bill and your overall business profit and loss.

Records for Income

When you earn money, it is helpful to keep a record of this. Many music teachers use invoices with students as a proof of booking. This isn’t essential to your record keeping, but it is useful should you ever need to prove your income.

When tracking income for the business, an Excel spreadsheet is a good tool to utilise. You can create income records for each student for each month of the year. This allows you to filter by student name, by date, by month and more.

Having this master record of every pound that enters your business over the year is the starting point for working out everything else.

Records for Outgoings

Your business outgoings are your expenses. This is the money that you spend in order for your business to run. Knowing exactly what your income and outgoings are over the financial year allows HMRC to provide you with an accurate tax estimate.

Outgoing records are very important. If you are spending money that you plan to claim as a business expense you must have proof to back this up.

Proof of expenditure would be things like receipts or email invoices for products and services that you might have acquired for your business. For your home office expenses, you would need to be able to provide proof of your utility bills and rental costs.

guitar-teacher-claiming-expenses

Outgoing records are very important. If you are spending money that you plan to claim as a business expense you must have proof to back this up.

Don’t forget to keep a mileage log for claiming travel expense! Our guide to claiming expenses outlines the sort of things that you can claim for against your tax bill.

If you use a digital accountancy tool such as Quickbooks, you have the facility to scan in receipts and invoices so that you can keep digital copies rather than filing away loads of paper copies. This can save a lot of time when it comes to submit your accounts so that you aren’t rummaging around through a box of a thousand pieces of paper!

About the Author:

This article has been written for Rockschool on behalf of MGR Music by Leigh Fuge, a professional guitarist, tutor and journalist from Wales in the UK. He has been working in the music industry for over 10 years as a touring and studio musician with various artists, guitar tutor and writer for many high profile guitar publications. Read more of Leigh's pieces relating to Rockschool here...