How Long Should You Keep Personal and Business Tax Records?

It's important for business owners to keep track of their personal and business tax records. How long you need to save these documents depends on the state in which you reside. Generally, however, you should keep your records for at least seven years. Keep reading to learn more about how long you should hold on to your financial statements and tax documentation.

Reasons Why You Should Keep Your Tax Records

There are a few reasons why it's important to have personal and business tax records. One of the most important reasons is that tax records can help you prepare your tax return. You can also use tax records to track your business expenses and income. This information can be useful when you file your taxes.

In addition, tax documents can help you resolve any disputes with the IRS. If the IRS audits your business for a specific tax year, having tax records can help you prove that you're in compliance with tax laws and that your business is running tax-efficiently.

If you're not sure how long you need to save a particular type of tax record, check with your tax professional or the IRS. By keeping up with your tax records, you can ensure that you're in compliance with tax laws, in case you’re ever audited by the IRS.

Different Types of Records

When it comes to tax records, there are certain types of records that you need to save. Your federal tax return is one example. Other examples include receipts for business expenses and records of income from your business.

Because there are so many different types of tax records, from employment tax records to property tax records to deductions and more, each business will have different types of documentation and information that they need to save. It's a good idea to consult with a business advisor or tax professional to find out what your business needs to keep track of.

It's important to keep in mind that tax laws change from year to year and can vary based on the gross income of your business. So, you may need to save tax records  for a longer period of time than seven years. Depending on the laws each year, you may need to save different types of records from year to year. Talk to an accountant or tax professional to find out what records you need to save and how long you should save them.

Tax Season

If you're a business owner, you know that tax season can be quite hectic. Not only do you have to worry about your own taxes, but you also have to worry about your business's tax obligations. One thing that can help make tax season a little less stressful is keeping good records. This includes both personal tax records and business tax records.

It's also important to remember that tax authorities, the Internal Revenue Service (IRS) can audit your tax returns at any time. So even if you've disposed of your documents, they may still be able to track you down. Because of this, it's important to keep good business records and tax records. Not only does this make tax season a little less stressful, but it also helps you stay compliant with tax laws.

So, How Long Should I Keep Tax Records?

Generally, you should keep personal tax records for at least six years and business tax records for seven years. However, there are a few exceptions to this rule. For example, tax authorities may require you to keep your records for longer if you file a tax return late. It's important to keep in mind that different types of tax records need to be saved for different lengths of time. For example, you'll need to save your tax return for seven years, but you'll only need to save bank statements for one year.

Business Advising and Tax Advising with Sorge CPA

Dealing with the IRS can be confusing, tricky, and downright stressful. Having the right documentation on hand can help alleviate some of the stress in case you get audited, but it’s always a good idea to have a professional’s help when dealing with business or personal taxes. At Sorge CPA, our team of specialists is available to provide valuable insights and recommendations delivered by a team with years of experience and expertise helping clients increase efficiency and strengthen financial controls.

We have offices in Madison, Waukesha, Oshkosh, Delavan, Watertown & Milwaukee. Our specialists work hand-in-hand with businesses and individuals to help them stay ahead of financial developments and guide them through the complex field of accounting and reporting regulations.

Give us a call today to learn more about what Sorge CPA can do for you.