The tax deadline has come and gone and now you’re wondering what to keep and what to trash. When it comes to taxes, your business should know what records to keep and for how long. We have outlined for you what is important to keep including supporting business documents and records. 

*Please note that the type of records you need to keep for federal tax purposes could vary depending on your type of business. Consult your tax expert at Clenney & Luke CPA.

Supporting Business Documents & Records to Keep
Supporting documents are generated through your purchases, sales, payroll and other transactions you have in your business. These documents include:

• Sales slips
• Paid bills
• Invoices
• Receipts
• Deposit slips
• Canceled checks

It’s important to keep these documents because they support the entries in your business books (i.e. ledgers and accounting journals) and on your tax return in an orderly, safe place. We suggest developing a filing system by year and type of document.

Records you should keep are gross receipts, purchases, expenses (costs as well as travel, transportation, entertainment and gifts) and assets. Here we dive into more detail about these records and what supporting documents are affiliated with each:

• Gross receipts – income you receive from your business
  • Cash register tapes
  • Deposit information (cash and credit sales)
  • Receipt books
  • Invoices 
  • Forms 1099
• Purchases – items you buy and resell to customers
  • Canceled checks or other documents that identify payee, amount and proof of payment
  • Cash register tape receipts
  • Credit card receipts and statements
  • Invoices
• Expenses – costs you incur to carry on your business, other than purchases
  • Canceled checks or other documents that identify payee, amount, and proof of payment/electronic funds transferred
  • Cash register tapes
  • Account statements
  • Credit card receipts and statements
  • Invoices
  • Petty cash slips for small cash payments
• Travel, Transportation, Entertainment and Gift Expenses
• Assets – property, such as machinery and furniture, that you own and use in your business.
  • When and how you acquired the assets
  • Purchase price
  • Cost of any improvements
  • Section 179 deduction taken
  • Deductions taken for depreciation
  • Deductions taken for casualty losses, such as losses resulting from fires or storms
  • How you used the asset
  • When and how you disposed of the asset
  • Selling price
  • Expenses of sale
• Employment taxes – Keep all records of employment for at least four years. 

Source: IRS