You may choose any recordkeeping system suited to your business that clearly shows your income and expenses. Except in a few cases, the law does not require any special kind of records. However, the business you are in affects the type of records you need to keep for federal tax purposes. Generally, you must keep all required records and supporting documents for a period of six years from the end of the last tax year they relate to.

• Within that flow there are private documents, legal documents, signed and unsigned documents, and some documents you may not even need.
• After reviewing your situation, the CRA will provide to you written permission.
• Throwing away documents with your trash exposes your information to anyone willing to do a little dirty work to steal your identity.
• Because the burden of proof is on you to back up every item on your tax return with documentation, the best approach to recordkeeping for small businesses is to try to keep as many records as you can.

We can even handle your tax filing and provide unlimited, on-demand consultations with a tax professional. One of the benefits of keeping electronic records is that you don’t have to store piles of receipts in a filing cabinet. Archive your old records so that you can access them years into the future, anytime you need. The main reason to maintain business records is for tax and auditing purposes. Requirements and laws for retaining records on employees who are injured in the workplace vary by state, and you should check with the responsible state agency for guidelines on keeping these records. On the federal level, the Occupational Health and Safety Administration (OSHA) requires businesses to retain records on workplace injuries for five years.

How long to keep your records

With this in mind, be sure to speak with a small business attorney to obtain a complete list. Businesses organized as corporations should keep some additional documents. These include board and shareholder meeting minutes, annual reports, corporate bylaws and amendments, and a stock ledger permanently. Many people choose to keep documents stored in a filing cabinet. Use file folders to organize paperwork by subject, year or another method of your choice.

Any business deduction on your tax return can be questioned during an audit—even expenses under $75. Good business recordkeeping lets you prepare financial statements, helps you keep tabs on your expenses, and comes in handy if you ever get sued or audited. Well, for starters, you sometimes need to have access to important documents for tax purposes or to borrow money. You may simply want to go back and compare one year’s financials to this year’s.

Asset records

Your employer identification number (EIN) or tax ID Number is like a social security number. It can never be assigned to another business, and you should retain it permanently, even if you no longer operate your business. To ask for a clearance certificate for GST/HST registrants, how long to keep business records fill out Form GST352, Application for Clearance Certificate (under section 270 of the Excise Tax Act), and send it to your tax services office. To ask for a clearance certificate, fill out Form TX19, Asking for a Clearance Certificate, and send it to your tax services office.

The employee I-9 form should be kept three years after hire or one year after termination. Keep the binder in a safe space (even if it just collects dust). It’s one of the first things that will be requested should you want to sell your company or be involved in an audit or lawsuit.

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If you ever face a tax audit, then you’ll have all the information you need. You also should consider saving documents that verify the information on your returns for at least seven years, like W-2 and 1099 forms, receipts and payments. If you have receipts related to assets, like receipts for home remodeling projects, keep these for as long as you are the owner.