At doola, we advise it is best for clients to be as thorough as they can reasonably be in retaining documents that may be used in tax preparation.
During tax season, there will be documents that we expect to be furnished for almost all our clients:
1. Bank statements for accounts relating to the business
2. Credit card statements for accounts relating to the business
3. Financial statements or records that were prepared by a recordkeeper (which doola offers in our bookkeeping services: contact our sales team for further details)
4. Receipts for any expenses claimed that are above $75.
5. Listings or details for any assets that the business may own
6. Invoices on sales of items, as well as some internal methods of tracking the cost of goods sold
7. If there are large cash withdrawals at any point during the year, our CPAs would expect some sort of itemized details (with documentation) that would break down the ultimate cash expense
Do I need to keep track of every single item I purchase?
This question is by far the most asked question regarding documentation requirements for tax preparation. There is generally no need for a business to keep receipts on expenses that fall under $75.