Good record-keeping is not just admin. It protects your business, supports your tax returns, helps you claim the right expenses, and makes life much easier if Revenue ever asks questions.
In Ireland, Revenue generally requires business records to be kept for six years, and companies must also keep accounting records for at least six years under the Companies Act. Records can be kept manually or electronically, but they must be complete, accurate, and capable of showing income, purchases, expenses, and tax position.
The problem we see most often is not that owners refuse to keep records. It is that they think they have them, until they actually need to find something. This guide covers what to keep, how long, and where most businesses go wrong.
What records do sole traders, companies, and employers need?
The basic rules apply to both sole traders and limited companies, but the scope is different.
A sole trader needs records to support income tax, VAT where registered, expenses, capital purchases, and any employees or subcontractors. That covers sales, purchases, receipts, invoices, bank statements, mileage, assets, and anything needed for the Form 11 tax return.
A limited company needs all of the above, plus company records such as director loan account details, board minutes, share paperwork, annual return information, company accounts, corporation tax records, company registers, RBO records, and CRO correspondence.
An employer must also keep payroll records, employee details, payslips, Revenue submissions, pension information, contracts, leave records, expenses and benefits records.
The more roles a business has, whether trader, company, employer, VAT-registered business, or contractor, the more important the record system becomes.
Sector-specific extras
Some sectors need more attention than others:
- Hospitality businesses need sales reports, till records, card reports, supplier invoices, payroll, stock and VAT records.
- Contractors may need mileage, tools, subcontractor, RCT and vehicle records.
- E-commerce businesses need payment platform reports from Stripe, PayPal, Shopify, and Amazon, plus foreign currency, VAT and stock records.
The most common record-keeping mistakes we see
When new clients come to OTHS, the problems are rarely unusual. They are usually basic records that were never kept properly.
The pattern we see most often includes:
- Missing purchase invoices
- Receipts faded, lost, or only sitting in WhatsApp
- Bank accounts not reconciled
- Personal and business spending mixed together
- Cash sales not properly recorded
- VAT claimed without proper invoices
- VAT not claimed where it could have been
- Mileage records missing
- Director payments not tracked properly
- Supplier statements not matched
- Loan payments not split between capital and interest
- Payroll records not linked back to accounts
- No clear record of who owes the business money
- No clear record of what the business owes suppliers
- Software subscriptions and card payments uncategorised
The biggest issue is that the owner often thinks the records are “mostly there”. But when it comes to VAT, year-end accounts, or a Revenue query, “mostly there” is not enough.
What poor records actually cost you
A common example is VAT. We have seen clients who had filed VAT returns, but VAT on purchases was under-claimed because invoices and receipts were not captured properly. The client was losing real money simply because the records were incomplete.
We have also seen cases where VAT returns were not filed at all for up to 12 months. By the time the client came to us, the issue was no longer just bookkeeping. It had become a Revenue compliance problem, with interest and penalties in scope.
Another example is director spending in a limited company. Where personal expenses, drawings, reimbursements, and company payments are not tracked properly, the director loan account can quickly become messy. That creates tax issues, extra accountancy work, and confusion over whether money taken from the company was salary, repayment, expenses, or a loan.
Poor records usually cost money in three ways: missed claims, professional fees to fix the problem, and possible Revenue exposure.
Digital or paper: what actually works
Our view is simple. Move away from the shoebox.
Paper still has a place for original legal documents, contracts, leases, loan agreements, share documents, or anything that may need to be physically signed or retained. But for day-to-day bookkeeping, digital records are almost always better.
We recommend systems such as Xero, Hubdoc, Dext, or similar receipt-capture tools. A photo or scan of a receipt uploaded to the right system is far better than trying to find the paper copy 10 months later.
However, the system has to be used properly. A random photo in WhatsApp is not a good record-keeping system. Receipts and invoices should be uploaded into a proper accounting or document capture system, attached to the transaction where possible, and stored in a way that can actually be found again.
How long should you keep records?
The headline rule for most tax records is six years. Revenue guidance says records generally need to be retained for six years from the date of the transaction, act or operation. VAT records should be kept because they affect VAT liability and the entitlement to reclaim VAT.
For companies, accounting records must be preserved for at least six years after the end of the financial year containing the latest date to which the record relates.
Some records should be kept longer in practice, including:
- Capital asset purchase records should be kept while you own the asset and for years after disposal
- Property purchase and improvement records should be kept for CGT support
- Share issue, share transfer and company ownership records should be kept long term
- Company registers, constitution and statutory books should be retained permanently
- Pension and employment records may need longer retention depending on the issue
- Loan agreements and leases should be kept for the life of the agreement and after
- Grant records should be kept according to the grant conditions
- R&D or tax relief support should be kept in detail, especially where claims may be reviewed later
The safe approach is not to destroy important structural, legal, tax or capital records just because six years have passed.
The documents people forget exist
The records we constantly have to chase are usually the ones clients do not think of as “accounts”.
Common examples include:
- Mileage logs
- Parking and toll receipts
- Home office calculations
- Personal cards used for business expenses
- Director loan account explanations
- Board minutes for major decisions
- Loan agreements
- HP and leasing documents
- Vehicle purchase documents
- Insurance schedules
- Grant approval letters
- Merchant reports from Stripe, Revolut, PayPal, SumUp or card terminals
- Till reports and Z reports
- Stock records
- Subcontractor and RCT records
- Employment contracts and payroll changes
- Pension records
- Share issue and share transfer paperwork
- RBO ownership changes
- Contracts with customers or suppliers
- Evidence for large cash lodgements
These records matter because they explain the numbers. Without them, the accountant may see a transaction but not know how it should be treated, or whether it can be claimed at all.
What happens if Revenue reviews your business
If Revenue reviews or audits a business, they will usually want to see the records behind the returns.
That typically includes sales invoices, purchase invoices, VAT records, bank statements, payroll records, expense support, supplier statements, customer records, cash records, and explanations for any unusual transactions.
For VAT, Revenue can look at whether VAT was charged correctly, whether VAT was reclaimed correctly, and whether proper invoices exist to support each claim. For payroll, they can look at employee payments, PAYE submissions, expenses, benefits, and director payments.
Good records can save a client because they allow the accountant to respond clearly and quickly. Bad records create uncertainty. If the business cannot support a claim, explain a lodgement, or produce the invoice, the position becomes much harder to defend.
When to move from spreadsheets to accounting software
Spreadsheets can work for a very simple business at the beginning. But there are clear signs that it is time to move to accounting software.
We usually recommend moving to software when:
- You register for VAT
- You hire your first employee
- You have regular supplier invoices
- You issue regular sales invoices
- You use card processors such as Stripe, PayPal or SumUp
- You have more than one bank account
- You need regular reports
- You are spending more than a few hours a month updating records
- You cannot easily tell what customers owe you
- You are unsure what VAT or tax is due
- You are preparing for funding or growth
For most growing businesses, Xero or similar cloud software is not a luxury. It is the basic system that keeps the records usable.
Our strong opinion
If your accountant has not asked how you keep your records, that is a red flag.
Good accounting starts with good records. If the bookkeeping system is weak, everything after it becomes harder: VAT, payroll, year-end accounts, tax returns, management accounts, and Revenue queries.
Another strong view: a photo of a receipt in WhatsApp is not a record-keeping system. It may be better than nothing, but it is not enough for a business that wants reliable accounts.
At OTHS, we prefer to set up the record-keeping process early. That means using cloud software, receipt capture, bank feeds, clear categories, and regular reviews. The goal is not just to keep Revenue happy. The goal is to give the business owner reliable numbers they can actually use to run the business.
Not sure your records are where they need to be?
If you are unsure whether your bookkeeping system will hold up to a VAT return, year-end, or a Revenue query, it is worth a short conversation. We can look at what you have, tell you what is missing, and set up something reliable from here.
OTHS Consulting is a Dublin-based accountancy and professional services firm supporting businesses across Ireland, the UK, and Luxembourg. Get in touch at [email protected] or +353 1 912 5422.
