Are Recordkeeping Requirements the Same for All Businesses?

Apr 7, 2022

One of the first decisions any new company must make is how to keep records. From measuring the operation’s profit margins to verifying that everything is in accordance with IRS tax requirements, accurate recordkeeping is critical to your company’s success.

Fortunately, the IRS doesn’t mandate that businesses keep records in a specific format. As long as your records show accurate income and spending reporting, you can pick the solution that works best for your company.

What Type of Recordkeeping System Should I Use?

There are numerous solutions available for keeping your company’s records organized, from basic manila folder filing methods to advanced online computer systems. A records management system, whether simple or complicated, must be easy to use and provide enough storage for your needs.

Above all, the recordkeeping system you select must be tailored to your specific business requirements. The nature, scale, and complexities of your company, as well as the resources available to it, will all play a role in determining which data storage system is appropriate for you and your company.

Why You Should Keep Records

Maintaining plenty of accurate records will help you:

  • Track your company’s growth
  • Prepare financial statements
  • Identify sources of income
  • Itemize deductions
  • Keep track of your property
  • Prepare tax returns
  • Confirm items claimed on your tax forms

How Long Should You Keep Records?

The amount of time you need to preserve a document is determined by the activity, cost, or occurrence it records. Keep the company records for as long as you need them to show your earnings or expenses on a tax return. Keep all employment tax records for a minimum of four years.

What Types of Records Should You Keep?

You are free to use whichever recording method is appropriate for your business and accurately displays your costs and revenues. Although there are a few exceptions, the government can not force you to follow any particular method of keeping records. The type of documents you need to retain for federal tax purposes is determined by the type of business you run.

There is something called the burden of proof that business owners should be aware of in relation to recordkeeping. In this context, the burden of proof refers to your duty to verify entries, expenditures, and statements on your tax records. To deduct costs, you must be able to verify certain criteria.

Getting Rid of Old Records

It is critical that documents be carefully disposed of once they have reached their expiration date. Shredding solutions destroy your documents according to your specifications. It’s critical to choose a reputable shredding company that will guarantee that all papers and electronic devices are securely destroyed.

Secure Enterprise Asset Management (SEAM) facilitates data deletion, electronic device recycling, and value recovery of technological equipment that is certified, legal, and safe in Sioux Falls, SD.

We work primarily with businesses in North Dakota and South Dakota, and our team recently implemented a mobile data shredding truck to make our services that much more convenient for you. Contact SEAM today to safely dispose of your company’s sensitive information.

SEAM provides IT recycling and data destruction services including onsite shredding and hard drive wiping to South Dakota, North Dakota, Minnesota, Iowa, and Nebraska.

Schedule a pickup or contact us for more information.