Keeping detailed financial records is a tall task for many small business owners. Tax officials require thorough documentation dating back years, and if you fail to comply, you could face fines up to $25,000 or even jail time.
To avoid being punished for missing documentation or business records, it’s best to maintain solid bookkeeping practices right from the start. While it takes a considerable amount of time to ensure you have meticulous ledgers and employment tax records, it can save you a great deal of trouble come tax season or any other time you have dealings with the IRS.
As an employer, you’re required to preserve employment tax records for at least four years. That history should provide a complete accounting of everything from amounts and dates of wage, annuity, and pension payments to documentation for allocated tips and fringe benefits.
Establishing firm ground rules is one way to prevent problems in your small business record keeping. For instance, you should always separate your personal bank accounts from those you use for business purposes. It’s also essential to retain bank statements and other documentary evidence, so your bank deposits are transparent and easily traceable.
For more complex financial record keeping matters, it’s wise to sit down with a qualified tax professional who can answer your questions about filing reports with government agencies, depreciation schedules, and other key concerns. Taxation Solutions, Inc. is pleased to help small business owners in the Charlotte area meet the tough tax reporting and documentation standards imposed by the IRS. Give us a call today!