What Kinds of Records Do I Need To Keep?

As a sole proprietor, you need to keep documentation to support the income and deduction claimed on your return. These records should be kept for a MINIMUM of three years after the due date of the return.

If you purchase business assets, you generally need to keep the records of the purchase for at least three years after the year in which you dispose of the asset. Payroll records should be kept for at least seven years; longer if you have employees who were under the age of majority in your state.

As to the form of records to keep, these can range from a recap of your business checking account, to a computer printout from a cash tracking program such as QuickBooks, or a manual bookkeeping set purchased at a local office supply store. It may be a good idea to meet with a local tax professional for guidance in setting up your record keeping method.

For further information, obtain IRS Publication 583.

(c) Copyright 1995-2015 by TaxLogic