How to Maintain Tax and Financial Records

How do you maintain tax and financial records?

Companies employ the skills of a CPA’s or an attorney for 2 important reasons:

  • To know your company’s financial standing and
  • To ensure its compliance in meeting financial obligations towards the local, city, state, and federal taxing authorities

The financial status of a business is a major factor that members of the board would take into account in finalizing any decision or resolution that would go into the company’s records book.

Maintaining Tax and Financial Records

    1
    Keep records of all shareholders and stock transfer ledger.

  1. Your records must include:

    • the name
    • contact number/s
    • class of stock that each shareholder owns
    • along with the copy of the shareholders’ agreement and other ownership documents
    • any resolutions concerning preferences or limitations of one or more types of stock shares made by the board
  2. 2
    Keep records of all financial transactions and reports

  3. In general, records of the corporation’s finances should be kept for a period of at least three (3) years and these include:

    • Accounts Payable and Accounts Receivable ledgers
    • Bank statements and reconciliations
    • General ledgers
    • Balance sheets
    • Receipts
    • Cash Disbursements
    • and Cancelled Dividend Checks

    These should be kept for an indefinite period of time.

    Note: Make sure to consult a CPA or an attorney before you decide to purge certain financial records.

  4. 3
    Keep copies of all local, state, and federal tax returns

    • Generally, just like all financial transaction and reports, you should keep your corporate tax returns for a period of at least three years.
    • This is the allowable period when you can amend tax returns.
    • The IRS recommends while employment records should be kept for four years from the date that the tax was paid or the date when it was due (whichever is later).
    • Any record of items claimed for depreciation should be kept as long as the item is still depreciating. For instance, if a corporation claims depreciation of assets on a certain period, any records relating to the purchase of the assets should be kept within that timetable.  
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