What Business Records Do I Need?

Now that spring is in full swing, most businesses will have closed out their 2015 financials and filed tax returns. If you are behind, it might be time to review your current accounting practices and consider something that is easier for you to manage—so you don’t find yourself falling behind on financial reporting and tracking the financial success of your company. Budgeting for small business is not the only financial item you need to be concerned with.

Knowing where you stand is one of the keys to future success as a small business owner.

One of the most important things when dealing with business accounting is to make sure you are keeping the proper records for future use.

While the exact record keeping process will vary depending on your industry and the requirements of various regulatory agencies, we have detailed a few types of documentation you will want to make sure you always keep.

Beyond budgeting for small business owners:

  • Income Tax Returns (and supporting documentation) – The IRS suggests that you keep all supporting tax records for seven years after they are filed. They suggest this because the standard amount of time that the IRS has to check into problems is six years. However, with online, paperless storage a much easier process now, there is no reason not to keep documentation for at least this long—if not indefinitely. 
  • Employment Tax Records – Employment tax records include information such all federal and state payroll tax returns, exact dates of wage payments as well as tax deposits, detail gross pay and deductions reporting on each payroll run, and other payments (such as pensions and annuities). It will also contain information about all employees. The IRS states you should keep these records for at least four years. 
  • Other Human Resources Files – Job applications, files relating to employee performance and other documents should be maintained while any employee is still working for you and for at least seven years after employment ends. These can be valuable if a workers’ compensation claim or lawsuit is filed after employment ends. 
  • Asset Records – When dealing with business property, it is important that you keep all records involving it until the period of limitations ends on the year you sold or otherwise do away with the property. These files can be useful for determining depreciation, depletion as well as gains or losses. Keep deeds or titles in a secure location since they can be difficult to replace. 
  • Financial Documents – Profit and loss statements, check registers, detail asset and liability ledgers, and other information may never be needed again, but CPAs often recommend keeping them for at least seven years, if not a permanent basis. 
  • Canceled Checks and Bank Statements – While you may be able to pull this information from the internet now, it can be beneficial to keep paper copies or a back up on another server.

Attempting to work with all these documents yourself can be a daunting task. Working with a virtual bookkeeper can be an excellent way to get caught up with the paperwork—and stay ahead. If you would like more information about how virtual bookkeeping can help your business grow and thrive, contact us today.