Wrap it Up!

On May 12th, 2011, posted in: Accounting, Marketing, Security by 0 Comment

Tax season is over (finally)! The last thing to be done is to take your tax return and combine it with all the supporting documentation. To be audit-proof, you need to retain documents that support your income and expenses for 3 years. If the IRS audits you and finds significant errors, they could go back 6 years, so just to be safe, keep everything for at least 6 years.

Many CPAs are now offering tax returns to clients on a CD instead of paper. Since our firm is totally paperless, after year-end we burn a CD for each client with all the documents supporting their income tax returns. Amazingly enough, we call it a Tax Support CD and we label it by year. This gives our clients all the documents they would need in case they were audited but it doesn’t mean that they’ll have boxes or file drawers full of papers. Included on the Tax Support CD are all of their bank statements along with our reconciliation reports, all the bills we have paid for them, any receipts they have given to us, sales tax and payroll reports, financial statements, any pertinent correspondence, W2s and 1099s that we sent or received for them, etc.

Some documents, like those for long term assets, should be kept for as long as you have the asset and then 3 more years. For complete information on what you need to be keep and how long you should keep it, check out the IRS website. They’re the experts!

 

About the Author

Leave a Reply

Your email address will not be published. Required fields are marked *