Guidelines for Document Retention

Please use this as a set of guidelines, and not as a replacement for any advice your Attorney, Tax Professional, or CPA has provided.

 

  • Documentation to retain includes, but is not limited to:
    • Invoices & Bills
    • Account statements
    • Credit card receipts and statements
    • Contracts and/or Lease Terms
    • Cash register tapes
    • Deposit information (cash and credit sales)
    • Receipt books
    • Forms 1099-MISC
    • Petty cash slips for small cash payments

 

  • Generally, keep all documents for seven years. This may be in paper or electronic format, or a combination of both.

 

  • For meals, entertainment, and travel expenses, clearly write on the receipt the purpose for the expense and the names for whom you paid. (Clients, customers, and other business relationships).

 

  • Use a consistent system to ensure documents are captured and retained in a reliable manner. If you have an app for capturing receipts, take a picture of the receipt as soon as you receive it.  If you track everything physically, have a specific place in your car (like a polyfolder) or a dedicated spot in your wallet for purchases.  Process those items daily or weekly to keep from losing items or forgetting important information regarding the expense.

 

  • Tricky areas are often electronics, meals, travel (including auto & fuel), continuing education, and entertainment. They must be for business purpose to be considered a business expense.  Tell us if a personal item was purchased on a business account so we can enter it correctly into the books.  Ask us if you are not sure if something is a business expense; we are here to help!

 

References:

Why Should I Keep Records?  https://www.irs.gov/businesses/small-businesses-self-employed/why-should-i-keep-records

What Kinds of Records Should I Keep?  https://www.irs.gov/businesses/small-businesses-self-employed/what-kind-of-records-should-i-keep

How Long Should I Keep Records?  https://www.irs.gov/businesses/small-businesses-self-employed/how-long-should-i-keep-records

What is the Burden of Proof?  https://www.irs.gov/businesses/small-businesses-self-employed/burden-of-proof