Audit-proof your business: Best record-keeping practice

When you’re running a small business, admin often takes a back seat. But when HMRC comes calling – or you’re preparing a tax return – clear, consistent records can save you more than just time. They can protect you from penalties, support your claims, and help your business stay on track.

For sole traders and SMEs, audit readiness starts with the basics: smart record-keeping, digital tools, and simple habits that keep your finances organised all year long.

This guide shares practical tips to get your business audit-ready – without the stress or last-minute panic.

You might not expect a tax audit, but that doesn’t mean you shouldn’t prepare for one. HMRC has ramped up its digital monitoring in recent years, and many small businesses are being asked to justify VAT claims, expenses, and income declarations – even if nothing’s wrong.

Clear records help you:

• Avoid penalties and delays
• Reclaim VAT correctly
• Back up mileage or fuel expenses
• Provide fast answers to HMRC queries
• Make smarter, more confident business decisions

Good record-keeping doesn’t have to be complicated. But it does need to be consistent. As a sole trader, you should keep:

• Income and invoice records
• Receipts for all business-related purchases
• Mileage logs for vehicle use
• Bank statements and transaction breakdowns
• VAT returns (if registered)
• Details of equipment, software, or asset purchases

These records should be kept for at least 5 years after the relevant tax year.

Storing paper receipts might seem easy, but they fade, get lost, and are harder to search. Use a digital tool or app to:

• Scan receipts as soon as you get them
• Attach them to expense categories
• Upload them to your cloud accounting software

Digital records are also easier to share with an accountant or HMRC if needed.

Mixing personal and business spending is one of the biggest headaches during an audit. Open a dedicated business account, and use it exclusively for your business.

That way:

• You’ll have cleaner records
• There’s less room for error or confusion
• Your expense claims are easier to validate

When you record your spending, label it accurately: fuel, travel, tools, phone, software, etc. This helps with budgeting, forecasting, and claiming the correct deductions.

Most accounting software lets you set default categories to speed things up.

If you claim for business travel in your vehicle, HMRC will expect to see a detailed log, not just a rough estimate.

You can:

• Use a mileage app
• Keep a manual logbook
• Track trip purpose, date, distance and route

It’s an easy habit that makes your fuel claims more accurate and defensible.

You don’t need to reconcile records daily. But leaving everything until year-end makes mistakes more likely. Set aside time weekly or monthly to:

• Upload receipts
• Check your categories
• Flag unusual transactions
• Review bank feed matches

A regular routine means your records are always audit-ready.

Fuel is one of the easiest costs to lose sight of, especially for sole traders on the move. Receipts go missing. Mileage gets guessed. Claims get missed.

That’s where a fuel card for sole trader use can really help.

With fuelGenie, you can:

• Track fuel spend by driver or vehicle
• View digital VAT invoices in real-time
• Download reports instantly at tax time
• Reduce reliance on cash or personal cards
• Keep your fuel costs separate, consistent and compliant

These tools not only simplify fuel tracking, they make your records stronger when it counts.

Audits don’t always come with warning, but clean records do. By setting up a few smart systems, using digital tools, and getting fuel tracking under control, you’ll always be one step ahead.

Record-keeping isn’t just a tax task, it’s a business habit. And the more consistent you are, the more confident you’ll be when it matters.