Best Practices fo Keeping Good Financial Records
As an entrepreneur, one of your many responsibilities includes keeping thorough financial records. But how many should you keep and what is the best way to organize them? Here are a few tips to help you manage this key aspect of your business:
Keep records for at least seven years.
- This timeframe will cover most issues involving taxes and financial reporting.
- Longer duration purchases and investments (such as a home) should always be kept for life of ownership + seven additional years.
Electronic records are allowed if done correctly.
- That said, it’s still recommended you keep the original receipts and paperwork and file them in a cabinet accordingly.
- For a specific list of accepted electronic records, see IRS revenue procedure 97-22.
Items worth recording / filing include:
- Cash register tapes.
- Bank deposit slips.
- Receipt books.
- Credit card slips.
- Canceled checks.
- Real estate closing statements.
Remember that no financial institution is obligated to maintain these records for you beyond a certain number of years, so it’s best that you do it yourself for future reference.