Record Retention

Make sure that you have receipts for all expenditures related to your business. A cancelled check is not sufficient. Be prepared, in case of an audit, to explain the business reason for expenditures. For unusual items, it is a good idea to make a notation on the invoice while the information is fresh in your mind.

Also, maintain your leases, bank loans, and other permanent long-term legal documents in files easily accessible at all times. Regular invoice and receipt files along with income records and reports should be maintained in annual files. These annual files should be archived at the end of each year and new ones set up at the start of each new year. See Appendix A-14 for a record retention guide.