Everything You Need To Know About Tax Records For Businesses

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"For every minute spent in organizing, an hour is earned." -Benjamin Franklin

In addition to the usual suspects -- W2 forms, 1099 forms, bank statements, brokerage statements, etc. -- we're talkin' receipts, sales slips, invoices, cancelled checks, and credit card and charity statements. Anything you can get your hands on will help you. Why?

There are many reasons why you should keep meticulous tax year records. At the top of that list, alongside the possibility that your business gets audited, is that it's easier to file when you have all your tax records in one spot.

That answer may sound simple, but when we're preparing to file your taxes, shuffling through closets and drawers and file cabinets will only create added frustration. No one wants that.

The When and The How

If the IRS suspects falsehood in your filing, resulting in more than a 25% return for your benefit, they have six years to inquire and investigate.

That should give you some idea of a timeframe ... otherwise, they have a maximum of three years to audit your return in general (that is to say, you have a max of three years to file or amend a return before you're really in trouble).

Speaking of real trouble, if the IRS suspects you of tax fraud, there is no statute of limitations. All bets are off, and they will track you down. Beware!

Again, it's important you have a systematized way of storing your tax information. The more organized you are, the better off you'll be.

In addition, if you ever feel like you're missing tax information, you can file tax form 4506-T or form 4506T-EZ.

The Who . . .

...was a great band who offered some timeless classics. But in our context, the who is always the IRS.

And when it comes to organizing your business records, playing it safe -- for the sake of potential IRS audits or run-ins -- is always your best bet. If you are holding any of the aforementioned tax documentation, and are asking yourself, "Should I keep this or throw it away?" err on the side of caution and file that sucker.

For tips about your bookkeeping system, how to store documents, and what to do in the event of a business audit, I would love to talk strategy. Those are questions no one wants to figure out alone anyway, so please reach out if all this information makes you wonder: Where do I even begin?

Because this is my livelihood, I have a good idea of where we can start. :)

BE THE ROAR not the echo! 

Warmly,

Janet Behm
Utah Real Estate Accountants
www.utahrealestateaccountants.com



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