13 Oct What business documents should you keep for taxes?
What business documents should you keep for taxes?
The cornerstone of any business is its documents and record-keeping processes. Good records will help you do much with your business, including monitoring the progress of your business, which items are selling, or what changes you need to make.
Keeping good records can increase the likelihood of business success and keep you from paying too much, or too little, in taxes.
The Internal Revenue Service suggests you keep these records for at least four years and up to seven years, to be safe.
Kinds of Business Documents To Keep
Except in a few cases, the law does not require any specific kind of records. With the help of your financial advisor, you can choose any recordkeeping system suited to your business that clearly shows your income and expenses.
While the system is variable, the types of records you keep aren’t.
1. A summary of your business transactions. Your books must show your gross income, as well as your deductions and credits. For most small businesses, the business checkbook is the main source for entries in the business books.
2. Electronic records. All requirements that apply to hard copy books and records also apply to electronic storage systems that maintain tax books and records. An electronic storage system, like Quickbooks, is any system for preparing or keeping your records either by electronic imaging or by transfer to an electronic storage media.
3. Gross receipts. Gross receipts are the income you receive from your business. These include cash register tapes, bank deposit slips, receipt books, invoices, and credit card charge slips.
4. Inventory. This is any item you buy and resell to customers. If you are a manufacturer or producer, this includes the cost of all raw materials or parts purchased for manufacture into finished products.
5. Expenses. These are the costs you incur to carry on your business. Your expenses should show the amount paid and that the amount was for a business expense.
6. Assets. These are the property, such as machinery and furniture you own and use in your business. You need records to figure the annual depreciation and the gain or loss when you sell the assets.
If you need to discuss your business’s financial records, record-keeping or Quickbooks, contact us for more information.