Types of Records to Keep for Business Taxes

Any record-keeping system that shows your business’s income and expenses is valid, but in certain cases the law requires special types of records. In any case, you’ll want to keep certain types of records for tax purposes, such as a summary of business transactions with customers and creditors, as kept in accounting journals, ledgers and business checkbooks.

Good records can help you prepare financial statements and tax returns, and determine what expenses are deductible. You’ll want to have records on hand to support the entries on your books, statements and returns. You should also keep records on hand in case you need to resolve any questions about your business operation. You might want to maintain your records for a long time if there is a potential for litigation on a certain issue, and consult a lawyer before discarding any of these documents.  

Records can be kept on paper or electronically. In both cases, make sure to make copies before moving offices, reorganizing records, or updating software and hardware. When it comes to files kept on a computerized system, the IRS has certain computer retrieval requirements, so it’s a good idea to consult a tax advisor about how these requirements might apply to you.

For tax purposes, you should keep any records pertaining to:

• Gross receipts of income
• Purchases (items bought and resold to customers)
• Business expenses
• Travel, transport, entertainment, gift expenses
• Assets
• Employment taxes

You can find the forms for any of these documents at Rocket Lawyer. Take the free Business Legal Check Up to find out exactly which forms are most appropriate for your business.

Laws on this topic may vary from state to state. This content is not meant to provide you with complete information and it is not intended to be legal or tax advice. It is recommended that you consult with your own attorney, accountant or other advisor regarding your specific situation.