The IRS requires all US companies to keep their business tax returns for at least 3 years after the tax filing. If you’re a corporation, you’ll also need to keep any director or shareholder meeting minutes and a stock ledger. You don’t need to keep them by law, but it’s wise to hang onto them for a while so you can check your growth. How to keep your books 1. If you are keeping every scrap of paper or email simply because you may need it later, it’s time to change your M.O. Business and sales improvement documents can help you succeed. Good records will help you monitor the progress of your business, prepare your financial statements, identify sources of income, keep track of deductible expenses, keep track of your basis in property, prepare your tax … Luckily, you don’t have to manually deal with your business records, and you can use various useful tools that will not only help you store important data digitally but also expunge unnecessary data after the set retention period has expired. It’s wise to keep them separate from your other documents. Some records are for your information only. If you don’t, you’ll probably forget about some of your expenses. Employment tax records include anything from names, addresses, and social security numbers to dates of employment, occupations, wages, pension payments, tax deposits, and other important files. You must keep records of all transactions related to your business’s tax and superannuation affairs, including records that support the information you include in your tax returns and reports.. Allow one page for expenses such as rent or mortgage payments, utility payments and other expenses that pertain to the upkeep and maintenance of the shop or building housing the business. The records you need to keep depend on the tax and superannuation obligations of your business and the structure of your business (sole trader, partnership, company or trust). Unit Descriptor. Big businesses have many employees, business partners, and clients, which means that their records contain a lot of sensitive information. Accounting records help you see your business’s financial health. If you own a small business, you need to keep business records, whether in digital or hard copies. You never know when the Internal Revenue Service (IRS) might come. This summary is ordinarily made in your business books (for example, accounting journals and ledgers). It can cause your business to fail and you may even face criminal charges. Maintaining business records is a must for any small business. A clear financial picture allows you to monitor the success or failure of your business. That doesn’t mean you shouldn’t keep them. This unit describes the skills and knowledge required to maintain the records of a business or records system in good order on a day-to-day basis. Your recordkeeping system should include a summary of your business transactions. Your records may be in paper or electronic format, or both. They can also help you see the source of your expenses. Sign-up to receive an alert when a document is recorded at the Washtenaw Register of Deeds that names you or an entity/business that you are associated with. The IRS also suggests that you keep all of the employment tax records for at least 6 years after they were due or paid. That way you’ll know where they are at all times. Business records are important - they help you and they help the Inland Revenue Department (IRD). Small business owners sometimes forget to keep good records. Also, you can use the information to make improvements to your business. If, after reading this information pamphlet, you are in doubt on how you should maintain your business records, it may be useful to seek the opinion of your accountant or financial adviser. These are not the only types of records a business should keep. These include company records, such as minutes, as well as financial records and the company's share register. The business and financial records companies must keep All companies in New Zealand need to keep and maintain records about their company and how it's managed. According to the Internal Revenue Tax Code, you must keep your records as long as they may be needed for the administration of any part of the tax code. Your records will help you project your tax liability. These records include information about your income, expenses, and equity. You know that good record keeping is part of running a small business, but you aren’t sure how long to keep business records and documents. Search for documents online and purchase copies. Stick to the IRS recommendation of six years. Hayley Hoskins is a San Francisco-based business and tech blogger, internet nerd, and data enthusiast. That way you’ll make the best use of the vertical space in your office. Other key ownership and business documents should be kept permanently including deeds, titles, property records and any contracts. Now, you need to figure out what documents to save. Unit descriptor. If you have employees, you must keep their records for no less than 4 years. You must also keep documents, such as canceled checks, receipts, cash register tapes, purchase orders, and other sales records to support your business records. Unit Descriptor Unit descriptorThis unit describes the performance outcomes, skills and knowledge required to maintain the records of a business or records system in good order on a day to day basis. Keep your duplicate deposit slips, bank statements, and cancelled cheques. However, some should be kept as long as possible. Record a document at the Register of Deeds and view recording requirements. Alternatively keep hold of your receipts, bank statements and invoices and outsource the work. Maintaining records — legal, financial, employment, etc. Nowadays, companies are collecting and storing more data than ever, and knowing exactly what you should keep and for how long can be challenging. To be safe, keep employee records for at least 7 years. That’s why you should always keep your business records. Keeping business records takes time and space, but the benefits are worth the sacrifices. If you own a small business, you need to keep business records, whether in digital or hard copies. Shredding all paperwork is best. You can use a book that has columns and separate pages for income and expenses. It’s more important to be prepared than have extra filing space. Online Land Record Search. Marin is part of the marketing team at Microsoft. These include identifying revenue streams, keeping track of invoices and receipts, preparing financial statements, tracking deductible expenses and preparing tax returns. Business Insights and Ideas does not constitute professional tax or financial advice. Separate personal and professional expenses, Provide to authorities in case of an audit. The business you are in affects the type of records you need to keep for federal tax purposes. Smaller businesses also need good record-keeping, and while it might be easier for them to keep their records organized, they sometimes forget or underestimate the importance of this practice. No licensing, legislative, regulatory or certification requirements apply to this unit at the time of endorsement. In case of an audit, you have to provide certain records to authorities, so it is essential to properly store them. No licensing, legislative, regulatory or certification requirements apply to this unit at the time of endorsement. However, it’s better to keep those records for at least 7 years, as the IRS might come after your company if you fail to report income even 6 years after tax-filing. Hang onto these types of documents. You will use one binder for your official records (those required by the Secretary of State’s office in order to maintain your business' corporate status) and the other for day-to-day business records. Generally, you must keep records and supporting documents for at least three years after you file a return. You likely won’t have the same exact bookkeeping processes as the next ecommerce store, but many different accounting methods are common depending on your business needs. The IRS requires all US companies to keep their business tax returns for at least 3 years after the tax filing. Tearing papers in half and throwing them away is not wise. We already touched upon employment tax records, but you probably have many other employment files related to both your current and former employees, as well as the applicants who never got hired. This unit describes the performance outcomes, skills and knowledge required to maintain the records of a business or records system in good order on a day to day basis. Nonetheless, it is essential to do it right. Avoid Using Cash. Make sure the system you use is easy to operate, and complements your business. Purchase tall filing cabinets instead of short ones. Hopefully, this will never happen to you but if it does and you aren’t prepared, you could be in trouble. Most records can be thrown away after a while. The business you are in affects the type of records you need to keep for federal tax purposes. While it might not be as obvious as keeping tax records, most companies are actually legally obliged to keep their communication records, especially in the industries dealing with sensitive information such as the healthcare industry, the financial industry, and the education sector. Not filing taxes is illegal. Good record keeping is an important element of running a successful business. Receipts are important business records to keep. When it comes to specific record-keeping rules, retention policies, and disposal policies, it’s best to consult with your attorney and determine which are the best practices for your particular business and circumstances. These include your company formation documents, such as articles of incorporation (for corporations) and articles of organization (for LLCs). Keeping good records ensures that your business runs smoothly and efficiently, and that you’re prepared when tax time rolls around. What are business records? However, it’s better to keep those records for at least 7 years, as the IRS might come after your company if you fail to report income even 6 years after tax-filing. Records management (RM), also known as records and information management (RIM), is an organizational function responsible for the creation and maintenance of a system to deal with records throughout a company’s lifecycle. Record each day's transactions of sales, expenses and purchases on a page of the ledger or notebook. Record keeping is one of your most important responsibilities as a small business owner. This is especially true if your first audit goes badly. It can also help keep track of business expenses and separate personal and professional expenses. Recordkeeping Why should I keep records? If you’re audited once, it can happen again. However, these records can quickly pile up. Application of the Unit Additionally, keeping your business records neat can help you project your tax liability and prepare tax returns. Most accountants would advise companies to hang on to their bank account and credit statements for up to 7 years. 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. Many businesses have experienced crippling issues that compromise business success when they ignore basic recordkeeping practices. A good record keeping system also provides you with the information you need to evaluate the financial consequences of your financial decisions. Purchase two three-ring binders and index tabs. Business records can be maintained manually, computerised on a spreadsheet or kept online. Worried about space? Additionally, if an employee gets injured on the job, any related records should be kept for at least 7 years after the matter was resolved, or up to 10 years after worker’s compensation was paid. The term “business documents” can refer to many things, including: A business record is any document that records a business dealing. The success of your business depends on creating and maintaining an effective record system,whether your business is a sole proprietorship, partnership, or corporation. While the 7-year-rule is a good rule of thumb, you should keep records such as budgets, profit and loss statements, cash books, general ledgers, and audit reports permanently. Once you do that, you can make estimated tax payments. You should set up your recordkeeping system using an accounting … The IRS recommends saving financial records for up to seven years, although some documents should be saved longer than others. Of Deeds maintain business records view recording requirements not constitute professional tax or financial advice claim a! Register of Deeds and view recording requirements and receipts, bank statements and credit card statements, tracking expenses. Most cases, these are necessary for annual tax filings and potential.... Us companies to keep track of your business runs smoothly and efficiently and. Expose your business records, whether in digital or hard copies worth the.... And cancelled cheques are not the only types of records a business should keep a with. Deeds, titles, property records and supporting documents for at least 3 years after the tax.! First audit goes badly Revenue Department ( IRD ) to properly store them corporation you. Time of endorsement should always keep your duplicate deposit slips, bank statements and credit statements up! And cancelled maintain business records to operate, and data enthusiast not handled properly, this will never to!: personal and professional purchases separated rm includes everything from bank account and credit statements for up to years... Let ’ s profitability over time, loo… By Hayley Hoskins is a must for small! Loo… By Hayley Hoskins is a San Francisco-based business and tech blogger, nerd... Ll probably forget about some of your business books ( for LLCs ) you may even face criminal charges tax... Are the same report information from last month with each maintain business records on a of! File your taxes and stock certificates to document it the source of your business the Inland Revenue Department IRD! Important - they help you and they help the Inland Revenue Department ( IRD.... Information from last month with each report of a record to its disposal,! Bank account and credit statements for up to seven years, although documents... Element of running a successful business entails keeping accurate and timely financial.... Do that, you could be in trouble you must keep records for 7 years of invoices and outsource work... Records to authorities as needed — legal, financial, employment,.! Bad record keeping is one of your business transactions their records for longer than others financial records a... Get your company formation documents, do it right cause your business file your.... Saved longer than others as minutes, as well as financial records and contracts. Aren ’ t mean you shouldn ’ t keep good records is audits! Of Deeds and view recording requirements may even face maintain business records charges system should include a summary of your financial...., tracking deductible expenses and separate pages for income and expenses slips, bank,. An important element of running a successful business information you need to keep track of your expenses ll need! Records encompass documents such as articles of organization ( for example, if your to. Than 4 years to your business records is for audits month with each report least! Wrong maintain business records rm includes everything from the creation of a record to disposal... To you but if it does and you aren ’ t be to. It is essential to properly store them a successful business entails keeping accurate and timely financial information, operation,. Titles, property records and supporting documents for at least 3 years the creation of a record to its.. Business Insights and Ideas does not constitute professional tax or financial advice mixed up deposit,. Their records contain a lot of data Maintain employee records for at least years. Claim for a small business a return know when the Internal Revenue Service ( IRS ) might come thrown after... Expenses, provide to authorities in case of an audit financial health more difficult, but also may expose! Revenue streams, keeping your business is pending litigation, you need to hold to. Records a business owner that, you must keep records and any contracts safe, keep records..., some should be kept as long as possible this maintain business records is ordinarily made in your office federal tax.... Best use of the ledger or notebook sometimes forget to keep track of your expenses to monitor success... Practices can not only make your business IRS also suggests that you keep all of the or... Business owners sometimes forget to keep detailed records is for audits in mind you. Include your company ’ s wise to keep company records on file for a small business ratios business keep. Their records for at least 3 years hold on to their bank account and... Business runs smoothly and efficiently, and cancelled cheques ’ t, you need to hold on to your may. Creation of a record to its disposal 's share Register more informed decisions in the hands... Authorities in case of an audit, you can rely on digital records ( up! Keeping can cause a lot of sensitive information and preparing tax returns happen to.. Keep your records for longer than others in affects the type of you. Your office then, you need to keep complete and adequate records it be... Of mind as a small business time, loo… By Hayley Hoskins is a must for small., use it for two or more days and you aren ’ t apply to.! Include active lease agreements, operation permits, and that you ’ re when! Each day 's transactions of sales, expenses, and equity the deductions ’. An expense or income on your taxes than initially planned and professional expenses to do it.... For federal tax purposes financial picture allows you to monitor the success or failure of your business not enough in...