For a business in Orange County, California to function properly, corporate records have to be kept and managed well. There are different kinds of corporate records, and one of the most crucial ones to keep are tax records.
Internal Revenue Service (IRS) requires all businesses in California to keep tax records properly. There are various kinds of tax records, and these are categorized according to different time periods. It is important that when tax time comes, you don’t find yourself panicking because your tax records are not in order. Tax records that are disorganized can cause you many losses once you get audited.
In order to protect your business from unnecessary tax problems, here are a few tips on tax record keeping that you should keep in mind.
1. Have Efficient Accounting Software Installed
Many corporate attorneys in Orange County, California would advise that an accounting software system is a good means to keeping tax records well. Although you may still outsource your final tax return to your business accountant, it will be a product of good record keeping, with the help of your accounting software.
2. Business Taxes Should Always be Supported by Proof
Entries you make on your tax return, like income, expenses and deductions, should be backed up by proof. You must be able to prove that you are eligible to claim the deductions. You are able to provide proof if you keep your corporate records in CA properly.
3. Keep Source Documents for Accounting Journals
Source documents for business related expenses are very important. Source documents include receipts, cash register tapes and cancelled checks, and these are what you make your accounting ledger and journal entries from. You also need these documents for tax deductions that you will get at the end of the year. The original copies of these documents should be kept properly, but to ensure that records are safe, make sure you back them up by scanning and saving them on your computer and on a flash drive.
4. How Long Should Tax Records Be Kept?
Basically, you need to keep your corporate tax records as long as they will be needed for administration, or any part of the tax code. The Internal Revenue Tax Code says that 4 years is the minimum length of time to keep employee records. For those who own property, corporate records in Orange County, CA should be kept until the period of limitations expires for the year wherein you dispose of the property for taxable disposition.
More Tips on Corporate Records
There are other corporate records that need to be kept and managed properly. Having a competent corporate lawyer in Orange County, CA assist you in corporate record management is a wise decision. Business lawyers are efficient in record keeping because they know which documents are necessary and which are not. They will also assist you if legal problems arise with regards to your corporate records.
In Orange County, California there are many good corporate attorneys. The best way to find one that you can entrust your corporate records to is through referrals from family and friends, and from other businesses in the area.