How Long to Keep Business Tax Records and Receipts Bench Accounting

For instance, you can use your online bank statements instead of paper copies. Even your receipts can be scanned and digitized to provide a record of your income and expenses. In addition to your tax filing documents, your business https://www.bookstime.com/articles/how-long-should-you-keep-business-records will also accumulate a lot of data about your employees. Some of these business records will directly impact your tax return, while others are simply a matter of maintaining clear records of your business operations.

Make sure to file your taxes promptly and accurately and keep business records connected to your income and expenses. Generally, you want to keep receipts and other documents that prove your income and business expenses. For business expenses, it is important to retain records that itemize the expenses and show that the expenses are indeed business expenses. Similarly, for business meals and entertainment, keep a log that lists who attended the meal or event with you and what the business purpose of the meal or event was. For travel expenses such as hotels, flights, and taxis, use a travel log to capture the travel expense and purpose of the business trip.

Physical documents

You’ll thank yourself the next time you do your taxes or get audited. This is really just another benefit to keeping digital records. Instead of worrying whether you should be keeping or getting rid of them, you can archive them permanently.

Digitizing your records is also a great way to avoid accidentally tossing them in a move or an overzealous fit of spring cleaning. Plus, let’s not forget that paper records can fade, and are susceptible to damage. Telling the IRS that “the dog ate my tax records” simply won’t fly. 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. You might also have leases for your business premises, insurance policies, and business loan records, among other documents.

Why do you need to keep business records?

Therefore, you should store founding legal files as long as your business is active and the reasonable period after if any problems arise. Certain industries, however, have specific requirements when it comes to documenting their practices and record-keeping. For example, home health agencies need to use Electronic Visit Verification to comply with Medicaid-funded home healthcare visits. Therefore, before creating your record retention policy, you should check all the relevant regulations that might apply to your industry. To understand our main question better – how long to keep business records, we should first understand the difference among the most common categories of business records.

• For example, founding documents are proof that you own your company.
• These include but are not limited to articles of incorporation, bylaws, biennial reports, stock ownership, and annual meetings minutes.
• These include company formation documents and ownership records such as stock ledgers, titles, deeds, property records, and contracts.
• Generally, you want to keep receipts and other documents that prove your income and business expenses.
• Some small businesses might also need to save additional contracts and reports for their own internal records, though the above list will be most important for filing your annual tax return.

As a result, many businesses manage their records almost entirely electronically. On the federal level, the Occupational Health and Safety Administration (OSHA) requires businesses to retain records on workplace injuries for five years. You might want to consult a professional tax advisor for specific advice about your business.

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Other information regarding corporation members and minutes from meetings should be retained for at least five years. If you have more documents to hold onto than you thought, don’t worry. By digitizing your business records, you can cut down on clutter and stay organized. Regardless of the record-keeping system you choose, stay consistent with your method.