2. Why do you need to keep “Good”
financial records?
! IRS – Preparation in case of an audit.
(Your Burden of Proof)
! Financial Statements – To monitor the financial
progress of your business. Help you in dealing with
banks and/or creditors.
! Tax Returns – Keep track of deductible expenses
and to support the items reported on your tax
returns.
4. What kind of records do you need to
keep?
! Gross Receipts (Income)
§ Bank Deposit Slips
§ Invoices to Customers
§ Forms 1099-Misc Received
! Purchases (Expenses)
§ Canceled Checks
§ Invoices you’ve paid
§ Credit Card Sales Slips
§ Receipts
5. That’s not all…
! Other Items –
Requires more than just a copy.
§ Schedule of your assets for depreciation purposes
§ Payroll records
§ Estimated tax payments
§ Form 1099-Misc issued to your contractors
§ Travel – Entertainment – Gift – Transportation (Mileage)
6. How should you keep your financial
records?
! File Folders
§ Manual File Folders
§ Electronic Files (Scanner)
! Bookkeeping System
§ Manual (Excel Spreadsheet)
§ Computerized (Accounting Software)
Legible – Complete - Accurate - Reliable
Garbage in – is Garbage out!
7. How long should you keep your
documents?
! Business Documents To Keep For One Year
§ Correspondence with Customers and Vendors
§ Duplicate Deposit Slips
§ Purchase Orders (other than Purchasing Department copy)
8. • Business Documents To Keep For Three Years
§ Employee Personnel Records (after termination)
§ Employment Applications
§ Expired Insurance Policies
§ General Correspondence
§ Internal Audit Reports
§ Internal Reports
§ Petty Cash Vouchers
§ Physical Inventory Tags
§ Savings Bond Registration Records of Employees
§ Time Cards For Hourly Employees
9. Business Documents To Keep For Six Years
§ Accident Reports, Claims
§ Accounts Payable Ledgers and Schedules
Accounts Receivable Ledgers and Schedules
§ Bank Statements and Reconciliations
§ Cancelled Checks
§ Cancelled Stock and Bond Certificates
§ Employment Tax Records
§ Expired Contracts, Leases
§ Expired Option Records
§ Inventories of Products, Materials, Supplies
§ Invoices to Customers
§ Notes Receivable Ledgers, Schedules
10. • Business Records To Keep Forever
§ Audit Reports from CPAs/Accountants
§ Cancelled Checks for Important Payments (especially tax payments)
§ Contracts, Leases Currently in Effect
§ Financial Statements (Year End)
§ Insurance Records, Current Accident Reports, Claims, Policies
§ Corporate Documents (incorporation, charter, by-laws, etc.)
§ Mortgages, Bills of Sale
§ Retirement and Pension Records
§ Trademark and Patent Registrations
11. Final Thoughts
! Invest in a Backup System
usb ports / offsite backup service
! Do your due diligence when looking for an accounting
software – Intuit’s QuickBooks is a great place to start.
! Expensify.com is a great phone application for storing
financial information….”Free”
! Remember – Ignorance of the IRS Requirements can be very
costly and just because you didn’t know doesn’t mean you
will get a free get out of “Penalty” pass.
