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Last Updated: 5/1/2017

Record-keeping

Why should I keep records?

Keeping good records will help you:

  •  Monitor the progress of your business
  •  Prepare your financial statements
  •  Identify sources of income
  •  Track your deductible expenses
  •  Track your basis in property
  •  Prepare your tax returns
  •  Support items reported on your tax returns

What kinds of records should I keep?

You may choose any record-keeping system suited to your business that clearly shows your income and expenses. Except in a few cases, the law does not require any special kind of records. However, the business you are in affects the type of records you need to keep for tax purposes.
 

How long should I keep records?

The length of time you should keep a document depends on the action, expense, or event the document supports. You must keep your records as long as needed to prove the income or deductions on a tax return.
 

How should I record my business transactions?

Purchases, sales, payroll, and other transactions you have in your business generate supporting documents. These documents contain information you need to record in your books.

 

What is the burden of proof?

To substantiate entries, deductions, and statements made on your tax returns is known as the burden of proof. It is your responsibility to be able to prove certain elements of expenses to deduct them.
 

How long should I keep employment tax records?

Keep all records of employment taxes for at least four years.