All businesses must keep records of their income and expenditure. As well as your own need to know the level of profits or losses that you are making, you must keep account books to provide information for your tax, PRSI,Universal Social Charge (USC) and VAT returns.
For more information on income tax, PRSI, USC and VAT, see our document Tax for self-employed people.
I am a sole trader. What records do I need to keep?
You should record all your outgoings (expenditure) and all your income. You must keep receipts for the money that you spend and copies of the invoices that you send out to your customers. In the case of cash businesses, you should keep a copy of the till roll.
You can buy simple account books which will be adequate for a start-up business in most stationery shops. There are also a number of low cost accounts packages for small businesses available online. You do not have to have computerised accounts, as long as the information is kept in a tidy and logical manner.
You must keep supporting records (for example, invoices, bank and building society statements, cheque stubs and receipts). You do not have to send them in to Revenue, but you must keep them for 6 years in case of a Revenue audit, that is, an inspection.
You can claim certain business expenses against tax, such as purchase of goods for re-sale, wages, rent, rates, repairs, lighting and heating, running costs of vehicles or machinery used in the business, accountancy fees, interest paid on business loans, leasing payments on vehicles or machinery used in the business. as well as contributions to your personal pension (up to certain limits).
If you are working from home you may be able to claim a proportion of household bills such as telephone, heating, lighting etc.
Do I need to submit all these records to Revenue?
No, you generally do not need to submit any supporting documentation to Revenue with your tax return but you need retain it for 6 years as it may be requested by Revenue for an assurance check or an audit.
Form 11 (pdf) is the return of income that you, or your accountant submit to Revenue on 31 October each year, along with your payment for income tax, PRSI and Universal Social Charge (USC). Check out Section B of Form 11 and the Helpsheet (pdf) - they will give you a good idea of the information that Revenue needs from you.
What kind of bank account do I need?
You should have a separate bank account for the business, even if you are a sole trader. The entries on the bank statement should match your income and expenditure. At certain periods you may be owed money by customers, and you may also have bought items on credit. So, the dates of entries on your bank account may not be exactly the same as those in your account books.
Income and expenditure account: lists your income and any money that you have paid out during the month/year.
Bank account: your bank can provide monthly statements which should be kept together in date order. You should check off the money credited to your bank account against the invoices that you have issued in order to see how much you are owed. You check off the payments deducted on your statement against receipts and invoices that you have paid or are due to pay, for example to suppliers, utility companies etc., in order to see how much you owe at any time.
Profit and loss account: used to calculate the profit the business has earned after allowing for all the expenses and overheads that you have incurred in running the business.
Do I need an accountant?
If you are a sole trader it is advisable to get an accountant to do your annual returns to Revenue unless your business is very straightforward. The fees paid to accountants are likely to be lower the more complete your books are. It may also be useful to talk to an accountant at an early stage of business, to make sure that your books are set up in the right way to record the information that will be needed at the end of the year.
Similarly, if you are in a partnership it is useful to talk to an accountant at an early stage.
Private limited companies do not need to have their books audited by an accountant under certain conditions. They may get this audit exemption where:
The amount of turnover of the company does not exceed €7.3 million
- The balance sheet total of the company is less than €3.65 million at the end of its financial year
The average number of employees does not exceed 50.
For the full conditions applying to this exemption, see the Companies Registration Office' s Audit Exemption.
You can claim accountants' fees as an expense against tax.
Are there any other reasons why I should keep my accounts up to date?
If you apply for a business loan, your bank will want to see your accounts.
If you are having financial problems and apply for Jobseeker’s Allowance, the Department of Social Protection will want to see your accounts. If they are not up to date any payment you may be entitled to will be delayed.
What about employee records?
There are strict requirements for the information that you must keep on anyone that you employ. See our document Employers' obligations and employees' rights.
As an employer, you must submit returns and payment for PAYE, PRSI and the Universal Social Charge (USC) monthly, but from January 2012 there are special arrangements for small businesses which allow them to submit returns less frequently.
Where can I get more information and help?
The Local Employment Service in your area may provide supports.
The Chartered Accountants Voluntary Advice service (CAVA) can give free advice and assistance on your business affairs such as bookkeeping, business debts, VAT or payroll issues. Contact your local Citizens Information Service Service or MABS office to see if they offer the service. You can also call (01) 6377218 or email email@example.com.
See also our document Sources of information.