What financial records do I need to keep for my business?
The core records every business needs to maintain include banking records, income and expense documentation, payroll records, contractor records, and tax filings.
Bank and credit card statements document every transaction flowing through your business accounts. These are your primary audit trail and proof that transactions happened when and where you say they did. Keep the actual statements even if every transaction is already in your accounting software. If the IRS or state asks questions, statements from your bank carry more weight than reports you generated yourself.
Receipts support your expense deductions. The IRS requires receipts for any purchase over $75 and for all lodging expenses regardless of amount. Below $75, statements can serve as documentation, but having receipts makes everything cleaner. Digital copies work fine. Scan or photograph paper receipts and store them organized by date or vendor.
Invoices go both directions. Invoices you send document your income. Invoices you receive from vendors document your expenses. Both matter for tax purposes and for tracking accounts receivable and payable. Keep copies even after payment is made.
Payroll records include timesheets, pay stubs, W-4 forms, and records of wages paid and taxes withheld. New Jersey requires employers to keep payroll records for at least six years. The IRS requires four years from the date the tax was due. When requirements differ, follow the longer retention period.
1099 forms document payments to contractors and certain payments you received. Keep copies of every 1099 you issue to subcontractors and vendors, plus every 1099 you receive reporting income paid to you. These must match what gets reported on tax returns. Discrepancies trigger IRS attention.
Prior tax returns are essential. Your accountant needs them to prepare current returns and compare year-over-year. The IRS can audit three years back in normal circumstances, six years if they suspect substantial underreporting, and indefinitely for fraud. Keep returns permanently.
Beyond financial documents, maintain copies of contracts, leases, loan agreements, and anything else that affects your finances. Business formation documents, operating agreements, and amendments should be kept permanently. You don’t need these for day-to-day bookkeeping, but you’ll need them eventually.
The general rule for retention is seven years for most financial records. That covers the standard IRS audit window with some buffer. Payroll and employment records go at least six years. Entity documents and tax returns stay forever.
Digital storage works for almost everything. The records need to be accessible and organized, not necessarily physical. Back everything up in at least two places so a crashed hard drive doesn’t wipe out years of documentation.
Keeping records organized throughout the year is far easier than reconstructing them later. New Jersey bookkeepers who handle your books monthly will categorize transactions, save documentation, and keep everything reconciled so your records are always ready. Good full-service bookkeeping means your accountant gets clean files at year end and you’re not panicking if an audit notice arrives.
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More Questions
What is the difference between a fractional CFO and a full-time CFO?
The expertise is the same. A fractional CFO brings the same financial leadership as a full-time CFO but works part-time and costs a fraction of the salary. Small and midsize businesses get strategic guidance without the overhead of a full-time executive.
Read answerHow is a fractional CFO different from a financial advisor?
A fractional CFO handles your business finances, cash flow, and strategy. A financial advisor manages your personal investments and retirement planning. They serve completely different purposes.
Read answerIs a fractional CFO worth it for a business under $1M in revenue?
It depends on your situation, not the revenue number. A fractional CFO makes sense when cash flow is tight, margins are unclear, or you're making big decisions without good data. The value is in better decisions, not just clean books.
Read answerDo I need a bookkeeper if I'm already using QuickBooks?
QuickBooks records transactions but doesn't categorize them correctly, reconcile accounts, or catch errors on its own. A bookkeeper ensures your numbers are accurate and your reports actually mean something.
Read answerWhat does a fractional CFO deliver each month?
Monthly financial reports including profit and loss and balance sheet, plus a written synopsis with comparisons, trends, and projections. Beyond reports, you get ongoing access for questions and guidance on decisions.
Read answerCan a fractional CFO work alongside my existing bookkeeper and accountant?
Yes. A fractional CFO sits between the bookkeeper who records transactions and the accountant who files taxes, turning the numbers into strategic decisions. Each role serves a different purpose, and the coordination is usually straightforward.
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