What Records Should I Keep?

Keeping accurate and organized records is crucial for the success and sustainability of any small business. Not only does it help you track your financial health, but it also ensures compliance with legal and tax obligations. Here’s a guide to the essential records every small business owner should maintain.

1. Financial Records

Financial records are the backbone of your business. They provide insight into your income, expenses, and overall financial performance.

  • Key Financial Records to Keep:
    • Income Statements: Track your revenue, expenses, and profits over a specific period.
    • Balance Sheets: Show your business’s assets, liabilities, and equity at a given point in time.
    • Cash Flow Statements: Monitor the cash coming in and going out of your business.

2. Tax Records

Accurate tax records are essential for meeting your tax obligations and avoiding penalties. Keeping detailed records will make tax season smoother and ensure you claim all eligible deductions.

  • Important Tax Records:
    • Tax Returns: Keep copies of your business tax returns and supporting documents.
    • Receipts: Maintain receipts for all business-related expenses.
    • Payroll Records: If you have employees, keep detailed payroll records for tax reporting.

3. Legal Documents

Legal records protect your business and ensure compliance with local, state, and federal regulations.

  • Essential Legal Documents:
    • Business Licenses and Permits: Keep all necessary licenses and permits up to date.
    • Contracts and Agreements: Maintain copies of contracts with clients, suppliers, and partners.
    • Insurance Policies: Store copies of all business insurance policies.