How long should you keep business records?

Payroll tax returns will need to be kept at least seven years. Also, employee withholding, excise exemption certificates, manufacturing excise reports and retail excise reports will need to be kept for a minimum of four years.

The IRS has accepted electronic supporting documentation for several years. All requirements that apply to hard-copy books and records also apply to electronic storage systems that maintain tax books and records. The electronic storage system must index, store, preserve, retrieve, and reproduce the electronically stored books and records in a legible format. All electronic storage systems must provide a complete and accurate record of your data that is accessible to the IRS.

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Making accurate predictions and taking stock of your firm’s existing state also necessitate having meticulous records on hand. It’s best practice to organize records into categories as they are saved so they can be easily accessed later. The nature of the business itself can help determine the categories used to manage the records. Get expert advice on every topic you need as a small business owner, from the ideation stage to your eventual exit. Our articles, quick tips, infographics and how-to guides can offer entrepreneurs the most up-to-date information they need to flourish.

As a How Long Should You Keep Business Records owner, you likely have in storage various documents, such as tax returns, personnel records and bank statements. Unfortunately, there isn’t a steadfast retention rule that applies to all kinds of records, meaning you need to categorize your files and create a document retention policy . The tax arena provides the greatest framework for how long tax preparation documents and returns should be retained. The Internal Revenue Service requires you maintain copies of your tax returns and supporting documents for three years. However, the IRS can audit you for three years after a filing and in some cases that period extends to six years if suspected of making a substantial error on your return. Therefore, keeping tax documents for at least seven years is considered sufficient time in order to defend any tax audits, lawsuits, or other potential claims. Your tax returns are important documents to keep as part of your financial history.

Why do you need to keep business records?

Whether or not you need to hang on to your business paper bank statements is entirely dependent on your business and what your needs are. If you’re required to keep hard copies of your bank statements for tax or accounting purposes, then you’ll need to hang on to them.

• You need to have the flexibility to do different things in different situations.
• We can even handle your tax filing and provide unlimited, on-demand consultations with a tax professional.
• Maura focuses on sales strategies and tactics that lead to better sales results.
• Keep in mind you may need to keep the original versions of some documents.

The period of limitations is the period of time in which you can amend your tax return to claim a credit or refund, or the IRS can assess additional tax. The information below reflects the periods of limitations that apply to income tax returns. Unless otherwise stated, the years refer to the period after the return was filed. Returns filed before the due date are treated as filed on the due date.

How long to keep tax records and receipts for

https://www.bookstime.com/ records contain vital information about your insurance coverage that can protect your business or provide you with a refund for certain damages. You may have general business liability insurance or insurance for different aspects of your company, such as auto insurance or renter’s insurance. Unfortunately, there isn’t a hard-and-fast retention rule that would apply to all kinds of records. It would be best to determine what types of documents you have stored, categorize them, and make a retention policy.