Always keep receipts, bank statements, invoices , payroll records, and any other documentary evidence that supports an item of income, deduction, or credit shown on your tax return. If you deducted the cost of bad debt or worthless securities, keep records for seven years. But you still need to tell the IRS where and when the expense occurred, and what it was for.
When it doubt, keep it. Although you might not always need them to do your taxes, you should also keep the following business documents on hand:. Because the burden of proof is on you to back up every item on your tax return with documentation, the best approach to recordkeeping for small businesses is to try to keep as many records as you can.
Need some help with your bookkeeping and recordkeeping? Check out Bench. Receipts sometimes get lost, especially for small expenses. Can you still claim those receipt-less expenses as tax deductions? You might have to submit a list all of the people who were there with you when the expense occurred, and what you talked about really—the IRS wants to know if you talked shop. This is mainly due to the Period of Limitations , which is the time during which you can amend your tax return, or during which the IRS can perform an audit on your return.
For example:. You should keep employment tax records for at least four years after the date that payroll taxes become due, or are paid whichever is later. You may even need to pay them back. Hopefully, the last situation won't apply to you.
Not filing taxes is illegal. It can cause your business to fail and you may even face criminal charges. If you're audited once, it can happen again. This is especially true if your first audit goes badly. That's why you should always keep your business records.
Stick to the IRS recommendation of six years. Keeping business records takes time and space, but the benefits are worth the sacrifices. Having peace of mind as a business owner is invaluable. It's more important to be prepared than have extra filing space. When you get rid of old documents, do it safely. You don't want your information in the wrong hands. Shredding all paperwork is best. Tearing papers in half and throwing them away is not wise. Protecting your information should be your first concern.
Being careless could put your business security at risk. Most records can be thrown away after a while. However, some should be kept as long as possible. These include active lease agreements, operation permits, and stock certificates.
Hang onto these types of documents. You never know when you'll need them. It's wise to keep them separate from your other documents. That way you'll know where they are at all times. Your PSC register must include details of anyone who:. You must also keep any other financial records, information and calculations you need to prepare and file your annual accounts and Company Tax Return.
This includes records of:. You must keep records for 6 years from the end of the last company financial year they relate to, or longer if:.
Check what you need to do. To help us improve GOV. It will take only 2 minutes to fill in. For example, your insurance company or creditors may require you to keep them longer than the IRS does. More In File. Period of Limitations that apply to income tax returns Keep records for 3 years if situations 4 , 5 , and 6 below do not apply to you. Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.
Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction. Keep records indefinitely if you do not file a return. Keep records indefinitely if you file a fraudulent return.
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