Whatever type of business you start, there is now a statutory requirement to maintain accurate business records to enable you to declare your business income and expenditure. It is essential that your business provides accurate accounting information. Failing to do so could lead to a penalty fine. In theory, you could be charged up to £3,000 for failing to maintain proper accounting records, although in practice, this penalty will only be issued to persistent offenders or to individuals who deliberately destroy their business records to prevent the Inspector from conducting an enquiry.
Essentially, the statutory legislation does not prescribe what type of records you should ‘create’ however, it does say that financial records that are created by your business should be retained for 6 years. Your accounting records should enable you to declare your income and expenditure to HM Revenue & Customs.