Small Business Recordkeeping: What Records the IRS Wants You to Keep

Small Business Recordkeeping - What do I really need?

With today's accounting software, like Xero and Quickbooks, it's easy to hook the software up to your bank activity, write some rules so that the accounting software can categorize expenses, and forget about accounting until the end of the year.

Keeping the books updated for your business is required, but it's only one component. The other element, which many small business owners often neglect, is keeping the documents that substantiate your bookkeeping. The IRS wants you to keep these documents:

It is essential to keep these documents because they support the entries in your books and on your tax return. You should keep them in an orderly fashion and in a safe place, like the cloud. Applications like Dropbox and Google Docs can keep all your files organized and within arms reach.

Look, before you toss

The IRS wants you to keep the following documents to substantiate your expenses:

• Canceled checks

• Cash register tapes

• Account statements

• Credit card sales slips

• Invoices

• Petty cash slips for small cash payments

Many business owners think it is sufficient to keep credit card statements and toss the credit card receipts. As you can see from the list above, the IRS wants you to keep credit card receipts. If you're unsure of what to hold, follow the IRS's guidelines.

While we are not tax accountants - we are here to assist you with any Xero or Quickbooks set up issues you may have regarding record keeping. Contact our knowledgeable staff today to learn how we can help simplify our accounting.