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QuickBooks software training, support, and problem solving
Strategies and information for a total small business solution
Accounting ● Tax
● Bookkeeping ●
Office procedures
Recommended length of time to keep books and records
The IRS says you must keep your records as long as they may be needed to
prove the income or deductions on a tax return. For example, determining gain or
loss on a sale or disposal of an asset, you will need to substantiate the cost,
so records and receipts related to that asset must be kept as long as asset is
still in service and then add 3 years.
The IRS says the length of time to retain business
documents varies depending on how honest and how
accurate your tax returns have been. If you file a fraudulent return, you
must keep records indefinitely..
Reality is that destroying business records too soon or
keeping business records them too long (subpoenaed and introduced in evidence to support
the claims of adversaries) has cost organizations millions of dollars in
penalties, lost lawsuits, and created storage problems. The following
record retention table is based more on business status quo rather than on
authority, so use your best judgment and consult with your CPA and
put together a schedule for keeping records and retaining business documents for your employees to follow..
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GO
PAPERLESS 800-216-0763 |
More and more businesses are going paperless. The
savings in personnel time can be significant.
If this has been on your wish list, contact us at
800-216-0763. We sell paperless systems for the PC (software and
high speed scanner for electronic storage media) that integrates with QuickBooks and
other accounting software packages and indexes your files for fast
search and easy retrieval. If you are going paperless it is
important
to
stay in compliance with IRS
bookkeeping and recordkeeping requirements.
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Be sure to implement paperless document procedures and utilize software that will
- will ensure an accurate and complete
transfer of the hardcopy original document with a high degree of
legibility and readability when displayed on a monitor and when
reproduced in hardcopy
- the electronic storage media must
index, store, preserve, retrieve, and reproduce documents
- provide reasonable controls to ensure the
integrity, accuracy, and reliability of the electronic storage
media
- provide reasonable controls to prevent and
detect the unauthorized creation of, addition to, alteration of,
deletion of, or deterioration of electronically stored books and
records
- create and adhere to an inspection and
quality assurance program evidenced by regular evaluations of the
electronic storage system including periodic check of
electronically stored books and records.
- The information maintained must be
cross-referenced to and provide support for the taxpayers
books and records
- The procedures relating to the use of the
electronic storage system must be in writing and resources
(personnel, software/hardware) must be made available to the
IRS for locating, retrieving, and reproducing the books and
records. It must not be subject to any agreement that would limit
or restrict the IRS access to and use of the Electronic Service
System
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Free Demonstration.
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Retention Record Schedule
As you will see under authority, most decisions for retention
of documents are left up to the managers.
TYPE OF RECORD |
RETENTION |
AUTHORITY |
|
ACCOUNTING & FISCAL |
PERIOD YEARS |
|
Accounts Payable Invoices |
3 |
STATE |
Accounts Payable Ledger |
Permanently |
Administrative Decision |
Accounts Receivable Invoices & Ledgers |
5 |
Administrative Decision |
Balance Sheets |
Permanently |
Administrative Decision |
Bank Deposits |
3 |
Administrative Decision |
Bank Statements |
3 |
Administrative Decision |
Capital Asset Record |
3 after sale |
Administrative Decision |
Cash Receipt Records |
7 |
Administrative Decision |
Check Register |
Permanently |
Administrative Decision |
|
Checks, Dividend |
6 |
|
Checks, Payroll |
2 |
STATE |
Checks,
cancelled |
3 |
STATE |
Cost Accounting Records |
5 |
Administrative Decision |
Earnings Register |
3 |
STATE |
Entertainment Gifts & Gratuities |
3 |
Administrative Decision |
Expense Reports |
3 |
Administrative Decision |
Financial Statements, Certified |
Permanently |
Administrative Decision |
Financial Statements, Periodic |
2 |
Administrative Decision |
General Ledger Records |
Permanently |
Code of Federal Regulations |
Labor Cost Records |
3 |
Code of Federal Regulations |
Note Register |
Permanently |
Administrative Decision |
TYPE OF RECORD |
RETENTION |
AUTHORITY |
|
PERIOD YEARS |
|
Payroll Registers |
3 |
STATE |
Petty Cash Receipts |
3 |
Administrative Decision |
P & L Statements |
Permanently |
Administrative Decision |
Salesman Commission Reports |
3 |
Administrative Decision |
Travel Expense Reports |
2 |
Administrative Decision |
Work Papers, Rough |
2 |
Administrative Decision |
|
ADMINISTRATIVE RECORDS |
|
|
Audit Reports |
10 |
Administrative Decision |
Classified Documents: Inventories, |
|
|
Reports, Receipts |
10 |
Administrative Decision |
CORPORATE |
|
|
Annual Reports |
Permanently |
Administrative Decision |
Authority to Issue Securities |
Permanently |
Administrative Decision |
Bonds, Surety |
3 |
Administrative Decision |
Capital Stock Ledger |
Permanently |
Administrative Decision |
Charters, Constitutions, Bylaws |
Permanently |
Administrative Decision |
Contracts |
Permanently |
Administrative Decision |
Corporate Election Records |
Permanently |
Administrative Decision |
Incorporation Records |
Permanently |
Administrative Decision |
Stock Transfer & Stockholder |
Permanently |
Administrative Decision |
Insurance Policies |
Permanently |
Administrative Decision |
Patents & Related Material |
Permanently |
Administrative Decision |
Trademark & Copyrights |
Permanently |
Administrative Decision> |
PERSONNEL |
|
|
Accident Reports, Injury Claims, Settlements |
30 |
STATE |
Applications, Changes & Terminations |
5 |
Code of Federal Regulations |
Attendance Records |
7 |
Administrative Decision |
Employee Contracts |
6 |
Administrative Decision |
Fidelity Bonds |
3 |
Administrative Decision |
Garnishments |
5 |
Administrative Decision |
Health & Safety Bulletins |
Permanently |
Administrative Decision |
Injury Frequency Charts |
Permanently |
Code of Federal Regulations |
Insurance Records, Employees |
11 |
INS |
Job Descriptions |
2 |
Code of Federal Regulations |
Rating Cards |
2 |
Code of Federal Regulations |
Time Cards |
2 |
Code of Federal Regulations |
PLANT & PROPERTY RECORDS |
|
|
Depreciation Schedules |
Permanently |
Administrative Decision |
Inventory Records |
Permanently |
Administrative Decision |
Maintenance & Repair, Building |
10 |
Administrative Decision |
Maintenance & Repair, Machinery |
5 |
Administrative Decision |
Plant Account Cards, Equipment |
Permanently |
Code of Federal Regulations |
Property Deeds |
Permanently |
Administrative Decision |
Purchase or Lease Records of Plant Facility |
Permanently |
Administrative Decision |
TYPE OF RECORD |
RETENTION |
AUTHORITY |
TAXATION |
|
|
Annuity or Deferred Payment Plan |
Permanently |
Code of Federal Regulations |
Depreciation Schedules |
Permanently |
Code of Federal Regulations |
Dividend Register |
Permanently |
Code of Federal Regulations |
Employee Withholding |
4 |
Code of Federal Regulations |
Excise Exemption Certificates |
4 |
Code of Federal Regulations |
Excise Reports (Manufacturing) |
4 |
Code of Federal Regulations |
Excise Reports (Retail) |
4 |
Code of Federal Regulations |
Inventory Reports |
Permanently |
Code of Federal Regulations |
Tax Bills & Statements |
Permanently |
Administrative Decision |
Tax Returns |
Permanently |
Administrative Decision |
| Sales
Tax Returns |
Permanently |
Administrative Decision |
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Payroll Tax Returns |
7 Years |
Administrative Decision |
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Pension Returns |
Permanently |
Administrative Decision |
In a nutshell, to be conservative keep documents a
minimum of 7 years if the document supports
a deduction on your tax return. If the outlay or deposit of cash
resulted from acquiring or selling an asset, keep the documentation
for 7 years after the sale of the asset. Keep tax returns
permanently (except payroll returns may be discarded after 7 years
after the expense was reported). Keep all personnel records
as per schedule above and keep year end financials and general
ledger and year end inventory reports permanently..QuickBooks Training Home
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IRS
Circular 230 Disclosure: To ensure compliance with
requirements imposed by the IRS, we inform you that, any U.S.
federal tax advice contained in this communication is not intended or written to be used, and cannot be
used, for the purpose of (i) avoiding any tax related penalties that
may be imposed on you or any other person under the Internal Revenue
Code or (ii) promoting, marketing, or recommending to another party
any transaction or matter addressed in this communication |
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