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Health & Fitness

IRS, Tax Records & Your Small Business

A continuing fall-off in record keeping for expenses apparently caused by the illusion that electronically filed tax returns eliminate the need for paper backup combined with an increase in IRS audits in the quest for revenues is getting many businesses and individuals in trouble. Costly trouble.

The IRS generally does not require that records be kept in a specific way, but all documents that may affect a tax return should be retained. Tax employment tax records: small business owners must keep all employment tax records for at least 4 years after the later of when a tax is due or paid.

Small business owners are also advised to retain:

Gross receipts. Cash register tapes, bank deposit slips, receipt books, invoices, credit card-charge slips and Forms 1099-MISC.

Proofs of purchase.
Canceled checks, cash register tape receipts, credit-card sales slips and invoices.

Expense documents.
Canceled checks, cash register tapes, credit-card sales slips, account statements, invoices and petty cash slips for small cash payments.

Documents verifying assets.
Purchase and sales invoices, real-estate closing statements, and canceled checks.

For more information, see IRS Pub. 583, Starting a Business and Keeping Records, and IRA Pub. 463, Travel, Entertainment, Gift, and Car Expenses. These are available on the IRS Web site or by calling 800-829-3676.

You can also email us at taxinfo@bythenumb3rs.com

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