As a responsible business owner, you want to stay in compliance with local and federal regulations regarding recordkeeping. The process becomes manageable if you know exactly what to keep and for how long. Here is a quick rundown on which small business accounting recordsyou need to keep and for how long.
Gross Receipts – Any source of revenue for your business should be accurately documented. These documents include such things as cash register tapes, deposit information (both cash and credit sales), any receipt books you keep as well as invoices for accounts receivable plus 1099 forms for miscellaneous income.
Purchases & Expenses – On the flip side, a business owner should also be able to document all outright purchases as well as other expenses like utilities, machines, payments and payroll. Be sure to retain canceled checks or other documents that identify the payee and the amount, as well as proof of payment. You should also retain invoices, accounts payable statements, credit card receipts and petty cash slips.
Travel & Entertainment – This can sometimes be a gray area so the record keeping for travel and entertainment should be as thorough as possible. Everything from taxicab receipts through dinner tabs – with attached business info such as clients and matters discussed – to airplane tickets and hotel bills should be carefully collected and sorted by date.
Assets – When it comes to physical assets such as real estate, machinery, or furniture, retaining the paperwork is fairly straightforward. Keep records that show the purchase price and date of acquisition, the cost of any improvements, depreciation documents, paperwork on any insurance claims for losses, records that show when and for how much the asset was disposed of and finally any costs associated with the purchase or sale of the item.
Tax Information – While the government keeps tax records, they do require you to keep your own as well. Tax returns and any supporting documentation should be kept in case you are audited long after the time you filed has passed.
How Long? – Filing and storing your records is the first step. A business owner should also properly archive the records. If you are filing your tax returns in a timely and correct manner, three years should be more than enough for most records. Some exceptions do exist, however. In particular, keep employment records for four years and bad debt deduction records for six years. While this can be done physically or electronically, ensure that the records are safe and secure.
For more information on or help with the small business accounting records you should keep, please visit us at Ernst Wintter & Associates. Please contact our Walnut Creek CPA firm at (925) 933-2626.