If you're running a side hustle — whether it's selling online, freelancing, or offering a service — it's important to keep good financial records. Tracking your income and expenses helps you stay organised, avoid tax trouble, and understand how much you’re really earning.

Why Record Keeping Matters

• Helps you complete your Self Assessment tax return accurately
• Lets you claim valid business expenses to reduce your tax bill
• Gives you a clear view of your profit
• Keeps you prepared in case of an HMRC check

What to Track

You should keep a record of all:

• Income – sales, freelance payments, services
• Expenses – anything “wholly and exclusively” for business use, such as:
  • Postage & packaging
  • Software/tools
  • Advertising costs
  • Office supplies
  • Phone/internet (proportionally)
  • Travel for work

You don’t need fancy accounting software — a spreadsheet is often enough.

Simple Spreadsheet Setup

Use Google Sheets or Excel and create two tabs:

• Income – include date, amount, source, payment method
• Expenses – include date, amount, category, and what it was for

Keep digital copies of receipts or use your phone to photograph them. You must keep records for at least 5 years after the 31 January submission deadline.

Apps and Tools You Can Use

• FreeAgent – user-friendly accounting for small business
• QuickBooks / Xero – ideal for growing side hustles
• Pandle – free and UK-focused for sole traders
• Google Drive – store your spreadsheet + receipts

Need to Register?

If your side income goes over £1,000, or you want to claim expenses, you likely need to register as self-employed.

• Do You Have to Pay Tax on Side Hustle Income?
• Side Hustle vs. Hobby: What Counts as a Business?
• Do You Need to Register as Self-Employed?