Good records 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 an attorney before discarding 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.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.
