Rehab Accounting Log

The Internal Revenue Service (IRS) has formulated a set of fundamental guidelines for the record-keeping of tax papers. Aside from the realm of taxes, there is a startling lack of direction for how long you should maintain company documentation. The majority of legal professionals, accounting firms, and companies that provide bookkeeping services advise clients to maintain original records for at least seven years. As a general rule of thumb, a period of seven years is adequate for defending oneself against tax audits, litigation, and prospective claims. Returns to the Internal Revenue Service (IRS) and any records that support them must be retained until it is determined that the IRS is no longer able to audit the return. The Internal Revenue Service has the responsibility to perform an audit of your return for a period of three years after it has been submitted. However, if the IRS has reason to believe that you committed a “substantial error” on your return, that period of time is extended to six years.

Records pertaining to payroll taxes, such as time sheets, wages, pension payments, tax deposits, benefits, and tips, are required to be hidden for a time of at least four years following the day that the taxes were due or, if that date is later, the date that the taxes were actually paid. It is recommended that active employee files be kept for at least seven years after an employee has left their position, been terminated, or retired. However, if an employee experiences an accident while on the job or files a claim against the company, it is recommended that you keep your records for up to ten years after the claim has been addressed, even though the claim has been settled. Even if you decide not to hire the applicant for the position, you are required to keep their information for at least three years. Documents pertaining to the establishment of the company, minutes of annual meetings, bylaws, stock ledgers, and property deeds are examples of the types of ownership records that should be kept indefinitely. It is recommended that records pertaining to accounting services be kept for at least seven years. Because accountants tend to be a conservative bunch, they will frequently recommend that you keep financial statements, check registers, profit and loss statements, budgets, general ledgers, cash books, and audit reports permanently. This is because accountants are needed to follow commonly accepted accounting principles (GAAP). The seven-year regulation applies to all operational records, which include bank account statements, credit card statements, canceled checks, cash receipts, and check book stubs, among other financial documents.

The finest medicine for the fiscal well-being of your company is to ensure that its books are always up to date and correct. It enables you to effectively manage the cash flow of your company and to negotiate the finest deals with your suppliers and the most favorable interest rates with your lending institutions. The first things that your potential lenders will inquire about are any recent tax returns and updated financial records.