Keeping Good Business Records for Taxes
Tax season comes and goes, but the need to keep important business records never ends.
When you list items on your tax return, these items need to be backed up by records that can prove the entries on your return are valid. Records that support anything on your tax return relating to income, credits, or deductions should also be kept for at least three years — or longer in some cases.
While the IRS sets guidelines, it is also suggested to consult with experts ranging from your accountant or attorney to even your insurance company and follow their recommendations. You should also keep bank and credit card statements along with canceled checks and receipts.
Additional documents to include are invoices for the goods and services you pay for. These items are part of your profits and losses for the year, and if you list these on your tax return, you need to have the documents to support them.
The IRS recommends that if you have employees, you should keep records relating to names, social security numbers, wages, tax deposits, annuities, and other information for at least four years.
Knowing what records to keep and for how long is simply good business.
If you have questions regarding your document retention or want to find more valuable resources for small business owners, visit the Small Business and Self-Employed Tax Center from the IRS.