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!
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