Bookkeeping Basics for UK Directors

What records must a director keep?

HMRC requires businesses to keep financial records for at least 6 years from the end of the accounting period they relate to. Records include: all invoices issued and received, bank statements, payroll records, mileage logs, dividend minutes and vouchers, and any contracts or agreements with suppliers.

The monthly bookkeeping routine

Reconcile your bank account — match every transaction in your accounting software against your bank statement. Most software pulls bank feeds automatically.
Categorise transactions — assign expenses to the right categories (salary, travel, software, etc.). This is what drives your tax calculations.
Issue sales invoices — raise invoices in your accounting software for any work completed. Track outstanding payments.
Submit expenses — log any personal expenses incurred on behalf of the company (mileage, out-of-pocket costs) and process reimbursements.
Check VAT position — if VAT-registered, check your running VAT balance and ensure quarterly filing is on track.

What not to mix

Never use your personal bank account for company transactions, or pay personal expenses from the company account without proper categorisation. The two entities are legally separate — HMRC and Companies House both expect clean separation of records.

Frequently asked questions

Do I need to scan and store all receipts digitally?

For MTD purposes, you need digital records of the key data fields — not necessarily a scanned image. However, storing digital copies (photos on your phone, uploaded to your accounting software) is good practice as paper receipts fade and HMRC may request evidence.

How long do I need to keep payroll records?

PAYE records must be kept for at least 3 years from the end of the tax year they relate to. Some records (P60s, P45s) should be kept longer. HMRC recommends 6 years for most records.