Filing your taxes can be one of the least enjoyable parts of owning a business. To add to your already busy calendar, there are form submission deadlines that seem to creep up on you like a bullet train.
Once tax season is over, we frequently get asked,
"How long are you supposed to keep your tax records for?"
We feel you. As stressful as tax season is, we would love to light the pile of receipts and banks statements on fire too. Unfortunately, that is a huge no-no. Many of us have heard horror stories of a friend or family member being audited by the IRS, years after the filing date, just to realize, while searching for their financial records, they had thrown them out. So how long should you keep your records?
The IRS asks you to keep records for 3 years under normal conditions or if you filed for a return or refund after you filed your return. They recommend the following for more specific scenarios:
Keep them for 7 years if you file for a loss from worthless securities or a bad debt collection.
Keep them for 6 years if you did not report a portion of your income and that portion was at least 25% of your gross income.
Employment tax records should be kept for 4 years from the date it was filed or date it was paid.
Keep your records indefinitely if you failed to file a return, or you filed a fraudulent return. They require this.
There are solutions out there to make all of that record keeping easy. These solutions let you save the files as the days, weeks, and months go by and it complies with the IRS record keeping guidelines. Here is a compiled list of platforms you can use. Many offer free solutions based on your storage need:
There are also apps out there that will store your receipts and of course mileage apps to keep track of your mileage.
If you want help onboarding, we will be more than happy to assist. Schedule a call with us.
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