Business

Three Major Documents that you Should Keep after Filing your Business Tax

If you have been filing taxes, you know you must keep personal tax documents for some years. This is to make sure you have proof in case the IRS will come to you for an audit. Also, if you are a business owner, you should understand the rules for shredding tax documents. While the statues of limitations may vary by documents, the majority must be kept for at least seven years. Also, some of these pieces of paper must be kept for life. Make sure which documents you should keep and which you turn over to a Houston shredding company.

Here are the documents that you must after you file your taxes.

Income Documents

It is important for people to keep documents associated with their income such as 1099s and W-2 forms. But, businesses should keep records of the money their business gains. These can include product or service sales and shares of stock. These may also include investment gains or interest on investment portfolios. This also applies to the sale of business assets such as property. Business owners must document their business income. Also, this income must also be accounted for and claimed on IRS forms to avoid unpleasant chases from the agency. Saving these documents ensures you have proofs for earnings and tax payments.

Bank and Investment Account Statements

Make sure you have some pieces of data in original hard copy format. These include receipts and signed contracts. There are also documents that you have to keep in a digital format including investment and bank accounts linked to your business. These days, a lot of banks provides digital statements to their customers and you will want to keep these copies for future reference.

Business Receipts and Expenses

If you want to reduce the tax burden of your business, you want to go after deductions. If you require an audit by the IRS, you have to prove the expenses they deducted to avoid penalties and back taxes. This makes it important to keep receipts and maintain records of expenses, from payroll to the last piece of paper in the supply cabinet.

Now that you know which documents you must safely keep after filing your taxes, you should also know which paper you can dispose of. In general, copies of needed documents including records not associated with business expenses and income can be turned over to a document shredding company. These documents also include anything that has is beyond the accepted statute of limitation. But, before you start disposing of certain documents, consult with a tax professional first.