In this chapter
Keep useful everyday records
A monthly routine makes year-end easier
Invoices, receipts, platform details and statements.
Distinguish sales, refunds, loans and contributions.
Resolve fees, refunds and timing differences.
Keep records another person can follow.
Bank statements are useful, but usually do not establish a payment’s business purpose on their own. Good records explain both the amount and the reason.
- Sales and receipts
Customer invoices, receipts, sales-platform details and refund records.
- Expenses and payments
Supplier bills, receipts, payment evidence and business purpose.
- Bank and payment accounts
Complete statements, with platform fees and refunds reconciled separately.
- Owners and related parties
Contributions, loans, repayments, distributions and expenses paid on the business’s behalf; do not treat all of them as sales or expenses.
- People and assets
Payroll, contractor payments, and asset costs, business-use dates and disposals.
- Company and filing records
Formation, ownership changes, EIN confirmation, effective elections, filed returns, and submission and payment evidence.
＋How long do I keep records, including after closure?Retention varies by record; one period does not fit everything.
Electronic records should be complete, readable, searchable and backed up. Retention depends on the record and applicable rules; “delete everything after three years” is not a safe general rule.
Employment-tax records generally need at least four years after the tax becomes due or is paid, whichever is later. Asset records may remain relevant through the limitation period for the disposal year. Closing the company does not remove record-retention duties.
[21][20]Duties beyond the annual income-tax return
＋What might be due during the year?Check payroll, contractor reporting, estimated payments and state duties.
- Employees: wage withholding, Social Security, Medicare and federal unemployment tax may apply. Payroll deposits and returns have their own schedules; they cannot simply wait for the annual income-tax return.
- Contractor payments: Forms 1099 or other reports depend on the recipient, payment type, amount, method and tax year. Collect the required information early, without assuming every payment uses the same form.
- Taxable income during the year: the business or its owners may need estimated payments, depending on the tax structure. Passing income through to owners does not mean payment planning can wait until filing season.
- Specific activities: certain products, services, equipment or activities can trigger federal excise taxes.
- State or local activity: check official requirements for income, sales or use taxes, payroll registration, franchise taxes and annual reports as applicable. A federal return does not complete those separate obligations.
Check state and local requirements
A completed federal return does not finish state and local duties. The formation state and places where the business operates can have different requirements. Use official state government, tax-agency and business-registry guidance rather than relying only on a generic formation-service checklist.
- State income or franchise taxes and related returns.
- Sales or use tax, payroll registrations and other applicable taxes.
- Annual reports, registered agent, entity standing and registration for activity in other states.
- Dissolution, state tax-account closure, final reports and outstanding charges when closing.