Banking and payment activity
- All business bank statements for every month
- Business credit-card statements and payment records
- Merchant-processor, online-sales and deposit reports
- Check images and support for unusual transactions
- Records explaining transfers between accounts
Income and expenses
Retain invoices, sales summaries, customer-payment records, receipts, vendor statements and contracts supporting income and expenses. A bank transaction alone may not explain the business purpose, proper category or tax treatment.
Payroll and contractors
- Payroll registers and year-end payroll reports
- Federal and state payroll filings
- Employee wage statements
- Contractor payment detail and information returns
- Owner compensation and distribution records
Assets, loans and ownership
Keep purchase documents for vehicles, equipment, furniture, technology and other assets. Retain loan agreements, year-end lender statements and principal-and-interest detail. Preserve formation documents, ownership changes, capital contributions and distributions.
Taxes and compliance
Maintain copies of filed income, franchise, sales, payroll and information returns as applicable, along with notices, payment confirmations and correspondence. Keep prior depreciation schedules and financial statements so the next year begins with supported balances.
Reconcile before year-end
Books should agree with bank, credit-card, loan, payroll and merchant statements. Unreconciled balances can hide duplicates, omissions, misclassified transfers and incorrect beginning balances.