Business owners know that they need to keep accurate financial records – but that's often easier said than done! This is exactly why we designed TaxSlayer Books to make this as simple as possible. There are certain records that are particularly important when it comes to filing your taxes. The IRS doesn't have specific regulations about record keeping systems however they provide basic guidelines.

Income Records

Income records are one of the most important figures the IRS is concerned with. The income you track with TaxSlayer tax accounting software is a big part of determining your ultimate tax liability. Entering the transactions into TaxSlayer provides important documentation but you should always have back up receipts if possible.

Any time a business has a hard copy receipt, it should be kept to back up entries in the tax accounting software. This can include cash register receipts, credit card slips, invoices, deposit slips or any other documentation. A business can never have too much support proving a transaction's validity.

Many businesses do their transactions electronically through direct transfers or services such as PayPal, and these usually don't have hard copy receipts. Emails or other electronic records should be kept as proof of the transaction.

Expense Records

Any expenses recorded in your tax accounting software should also have back up documentation. In fact, it is probably more important to document expenses than revenue since these will reduce your profits and therefore your tax bill.

As with revenue, any paper receipts should be kept in case the expenses need to be proven. Canceled checks, invoices or other documentation provide important verification that the expense occurred and was a legitimate business expense. Travel, entertainment, and gift expenses are big red flags for the IRS and should be documented scrupulously. These should include not just the receipt but also some documentation that the expense was business related. For example, a receipt for lunch with a client should be supplemented with the client's name.

Employment Taxes

Proper documentation of taxes on employee salaries is another critical business documentation step. Your business will not only be providing information to the IRS but will also have to print W-2s and 1099s for employees. Proper and timely documentation in TaxSlayer Books tax accounting software throughout the year makes year-end filing a snap. Tip income is another area the IRS takes special interest so special attention should be taken to record this accurately.

Additional documentation outside of TaxSlayer may be needed. For example, W-2s returned as undeliverable should be kept as proof you sent them even if the employees didn't receive them. Presumably this would be a former employee who has not left a forwarding address.

IRS regulations say employment tax records must be kept for at least 4 years. The rules on other records are more complicated, but range from 3 to 7 years depending on circumstances.