What Tax Records Should You Keep?
There are few words that can universally make people cringe – among them is the word “taxes.” The brilliant Benjamin Franklin once said “In this world, nothing can be said to be certain, except taxes and death.” While we know we can’t avoid taxes – we do know that we can streamline the record-keeping end of things.
It is important to know what records you need to keep for long-term purposes. This allows you to streamline the process a bit and make your paper trail less burdensome. We have used the IRS’ website to compose a basic list of items that you should keep:
Gross Receipts – these prove business income. These include:
- Cash register tapes
- Bank deposit slips
- Receipt books
- Invoices
- Credit card charge slips
- 1099-Misc forms
Purchases – these include items that you buy and sell to customers. If you sell finished products or are a manufacturer you should include all receipts for materials and parts. These include:
- Canceled checks
- Cash register tape receipts
- Credit card sales slips
- Invoices
Expenses – these are costs that you incur to execute your business operations.
- All receipts both digital and physical
- Credit card invoices
Assets – this is a BIG one! These are the property of your business and include both physical and intellectual items. You must keep records for each individual asset that include the following information:
- Acquisition of assets (when/how)
- Purchase price
- Improvements – cost and value
- Section 179 deductions
- Depreciation calculation and deductions
- Casualty and loss deductions
- How you used the asset
- Selling price and how it was disposed
- Expenses of sale
Employment Taxes: Keep ALL tax documents for employees for a minimum of 4 years.
This list is pretty exhaustive and it still doesn’t even cover absolutely everything. As a business owner it may seem overwhelming, which is where we can help. Contact us today to help manage your tax filings – let us do the hard work for you!