It is a great idea to keep your important business documents (or copies) together in a binder or folder that you can access easily in the event you undergo an IRS audit. It is also a handy resource to have when meeting with advisors. This can be a physical binder or a digital version.
Stay on top of record retention guidelines by maintaining purge dates in your binder. This will be a helpful reminder for you to shred any hard copy documents you no longer need or are required to maintain, and to review your digital storage and remove any dated files you no longer should keep. Remember to update your purge date each year. Here are some tips on good record keeping practices.
Keep a list of everyone on your advising team so that they can easily be found. It’s also important to share information with all team members so they understand who is aiding with the growth of your business. Here are some suggestions:
- Tax Advisor
- Mortgage Banker
- Private Lender
You may have had a conversation with your attorney or tax advisor, and they mentioned business meeting minutes. For example, a corporation is required to keep corporate minutes and an IRS auditor will likely request them as part of their audit. Though many business owners may neglect to keep formal minutes, it is highly recommended as they are helpful to keep a history of important decisions made each year such as amounts of cash to be distributed to owners. For example, an auditor will review the minutes and compare to actual distributions to determine if it’s necessary to dig deeper.
Each year most states will send you a notice to file your annual report. Generally, the cost is inexpensive, but can be easily overlooked. If overlooked, the state may decide to administratively dissolve your business. To get your business back in good standing you’ll need to jump through a few hurdles of filings as well as part with a payment steep enough to likely remind you to never overlook filing the annual report going forward.
Any notices you receive such as account numbers assigned by state and local governments.
Any tax notice you may receive along with a record of resolution in the event you receive an identical request where the recipient failed to document your original response.
Any tax audit notices along with the resolution.
If you are in the initial stages of starting a business, this article provides some helpful Tips for Startups.