How To Prove Certain Business Expenses...7

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Jayson Chapman
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2 Table of Contents Accounting Systems...3 Taxation...3 Fixed Assets...4 Accounting Firms...4 Insurance...4 Corporate Records...4 Payroll...5 Miscellaneous...5 Human Resources...5 Security...5 Legal...6 Individual Records...6 How To Prove Certain Business Expenses...7 2

3 Accounting Systems Accounts Payable Ledgers & Schedules Journal Entries Accounts Receivable Aging Reports Petty Cash Records Accounts Receivable Ledgers & Schedules Accounts Receivable Invoices Accounts Written-off Authorization - Accounting Balance Sheets Bank Reconciliations Bank Statements Bank Deposit Slips Duplicate Deposit Slips Budgets Canceled Checks (but see exception below) Checks - canceled for important payments. i.e., taxes, purchases of property, special contracts, etc. (checks should be filed with the papers pertaining to the underlying transaction) Canceled Dividend Checks Cash Book Cash Disbursement & Receipt Record Cash Sales Slips Charge Slips Charts of Accounts Check Register Expense Analyses & Expense Distributions Schedules Expense Reports Financial Statements General & Private Ledgers (and end-of-year trial balances) Investment - Sales/Purchases Petty Cash Vouchers Profit / Loss Statements Purchase Order Sales Records Stock & Bond Certificates (canceled) Stockroom Withdrawal Forms Subsidiary Ledger Time Books Trial Balance Vendor Invoices Voucher Check Copies Tax Free Reorganization Taxation 338 Election Canceled Checks - Tax Payments Correspondence - Tax Depreciation Schedules Income Tax Returns Inventory Reports FUTA/FICA/Income Tax Withholding Payroll Tax Returns Revenue Agent Reports Sales Tax Returns Transfer Pricing 3

4 Fixed Assets Corporate Records Depreciation Schedule Amendments Inventory Records Annual Reports Physical Inventory Tags Articles of Incorporation Plans and Blueprints Audit Reports - Public Plant Cost Ledger Audit - Internal Property Appraisals Board of Directors - Committee Property Register Board of Directors - Minute Book Purchase Orders (except purchasing department copy) Purchase Orders (purchasing department copy) Bylaws Capital Stock Certificates Capital Stock Ledger Records for Property Subject to Depletion Capital Stock Transactions Charter Accounting Firms Contracts & Leases - expired Contracts & Leases - still in effect Tax Return Preparers Tax Return Prepared Contracts - After Termination Contributions Correspondence (routine) with customers or vendors Correspondence (legal & important matters only) Insurance Correspondence - Accounting Correspondence - General Automobile Insurance Claims Disability Insurance Claims - After Termination Expired Insurance Policies Dividend Register & Canceled Dividend Checks Election Records Financial Statements Invoices to Customers Invoices to Vendors Fire Inspection Reports Option Records (expired) Insurance Appraisals Organizational Charts Insurance Records, Current Accident Reports, Claims, Policies, etc. Safety Records Partnership Agreement Savings Bond Registration Records of Employees Foreign Insurance Policies Stock Transfer Records Stockholders - Minute Book 4

5 Payroll Human Resources Contractors Checks - Payroll Commission Reports - Salesperson Employee Withholding Exemption Certificates Payroll Register Payroll Records - After Termination Payroll Records & Summaries, including Payments to Pensioners Salary History Time Reports from date of completion contract 8 years W-2 Forms Vacation/Sick Pay Accident Reports - Settled Attendance Records Dental Benefits Disability Benefits - After Expiration/ Settlement Employee Medical History Employment Application - Not Hired Garnishments Life Insurance Benefits Medical Benefits Pension Plan Agreement Performance Record - After Termination Personnel File - After Termination Personnel Files - Current Employees Large Food or Beverage Establishment Reporting Tips Employee Tip Substantiation Profit Sharing Agreement Safety Reports Vacation Files Miscellaneous Workers Compensation Benefits Sick Pay Family & Medical Leave Receiving Documents Title Papers Security Vehicle Operating & Maintenance Telecommunication Copies 2 years Prepaid Dues Income Financial Institution Loan Loss Reserves Classified Material Violations Visitor Clearance 2 years Mutual Savings Bank Bad Debt Reserve Internal Reports Receiving Sheets Requisitions Stenographer s Notebooks 5

Legal Individual Records Bill of Sale Tax Return Copies Business Permits Medical Receipts Claims & Litigation Concerning Torts & Breach of Contract Contracts - Employees Contracts - Government

6 Legal Individual Records Bill of Sale Tax Return Copies Business Permits Medical Receipts Claims & Litigation Concerning Torts & Breach of Contract Contracts - Employees Contracts - Government Contracts - Labor Union Contracts - Special Forms 1099 Received Forms W2 Received 401 K / Keogh Statements IRA Statements (deductible & nondeductible) Loan Records / Forms 1098 / Copyrights Annuity Year End Statements Correspondence - Legal Insurance Policies - Life Deeds/Titles Insurance Policies - Other Leases/Canceled Major Purchase Receipts Licenses Mortgages Notes Receivable - Canceled Patents Year-end Brokerage Statements / Trade Confirmations Certificates of Deposit Statements Schedule K-1 s from Partnership or S Corporation Stock & Bond Record Trademarks - Registered House Records (canceled checks for purchase of major improvements & maintenance) Birth & Death Certificates Medical Records Wills Trust Agreements Detailed List of Financial Assets Held Alimony, Custody or Prenuptial Agreements Military Papers Photos or Videotape of Valuables 6

7 How To Prove Certain Business Expenses IF you have expenses for: THEN you must keep records that show details of the following elements: Amount Time Place or Description Business Purpose and Business Relationship Travel Entertainment Gifts Cost of each separate expense for travel, lodging and meals. Incidental expenses may be totaled in reasonable categories such as taxis, daily meals for traveler, etc. Cost of each separate expense. Incidental expense such as taxis, telephones, etc., may be totaled on a daily basis. Cost of the Gift Fair Market Value as of Date of Gift Dates you left and returned for each trip and number of days spent on business. Date of entertainment. (Also see Business Purpose.) Destination or area of your travel (name of city, town, or other designation). Name and address of location of place of entertainment. Type of entertainment if not otherwise apparent. (Also see Business Purpose.) Date of the Gift Description of the Gift Purpose: Business purpose for the expense of the business benefit gained or expected to be gained. Relationship: N/A Purpose: Business purpose for the expense of the business benefit gained or expected to be gained. For entertainment, the nature of the business discussion or activity. If the entertainment was directly before or after a business discussion: the date, place, nature, and duration of the business discussion and the identities of the persons who took part in both the business discussion and the entertainment activity. Relationship: Occupations or other information (such as names, titles, or other designations) about the recipients that shows their business relationship to you. For entertainment, you must also prove that you or your employee was present if the entertainment was a business meal. Transportation Cost of each separate expense. For car expense, the cost of the car and any improvement, the date you started using it for business, the mileage for each business use and the total miles for the year. Date of the expense. For car expense, the date of the use of the car. Your business destination. Purpose: Business purpose for the expense. Relationship: N/A 7

RECORD RETENTION SCHEDULES FOR BUSINESSES

RECORD RETENTION SCHEDULES FOR BUSINESSES How to Prove Certain Business Expenses Must keep records that show details on the following: If you have expenses for: Travel Entertainment Gifts Amount Time Place