What You Really Need to Know About Record Keeping

If you run your own business with no employees, your bookkeeping can be very easy and simple to manage. All you really need is a bank account (separate from your personal account) a ledger or system to keep track of your expenditures and your income, and a place to file and store your receipts.

Although it’s always good to have a tax professional prepare your year-end returns, there are many inexpensive accounting software programs on the market that will keep you organized and honest. This could also save you some money on the billable hours it will take for your accountant to prepare your taxes. Get their recommendations on what program would be best suited for your particular business.

It’s important to keep in mind that you must keep all your business records for a certain period of time in order to enforce tax laws. Here is a handy list of documents and the amount of time you are required to keep them:

  • General correspondence  – 5 years
  • Bank statements – 7 years
  • Receipts – 7 years
  • Cancelled cheques – 7 years
  • Year-end financial statements – Indefinitely
  • Contracts – Indefinitely
  • Licences and permits – Indefinitely
  • Insurance claims – Indefinitely
  • Tax returns – Indefinitely

 As always, make sure your check with your financial or tax professional for advice or guidance.

 

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