There are a lot of questions about using invoices particularly on how long it will take to keep files invoice. Business recordkeeping is good when you make it a good habit rather than thinking it is your job to keep it because you are paid to do it. Your employees that are assigned to your financial or accounting tasks should consider organizing and keeping invoices or any kind of important documents as an everyday practice just like when they needed to clock in or clock out at work, cook every mealtime, or clean house during their day off. Admit that sometimes your staff does careless things and monitoring their financial work is crucial as the IRS will require you to keep your business financial records. Your tax filing process is needed to be complete and accurate to make all your claims valid.
Here are some of the questions guide that you need to know:
- HOW LONG TO KEEP YOUR RECEIPTS OR INVOICES?
Your receipts or invoices together with your tax records should keep at least 3 years and a maximum of seven years. The IRS How Long Should I Keep Records discussed that the period of limitations stated is the period of time in which you can amend your tax return to claim a credit or refund, or the IRS can assess additional tax.
- IS IT SAFE NOT TO KEEP MY RECORDS AFTER 3 OR 7 YEARS
Your time frame in keeping your invoices and tax records depends on the action, expense, or event which the document records. It depends on where the period of limitations you fall and when it reaches the specific limit you are no longer needed to keep the tax return or any of its supporting papers.
- ARE ELECTRONIC INVOICES ACCEPTABLE?
Paper invoice or electronic invoice is both acceptable. You just have to make sure paper invoice files are in good condition. Otherwise using a digital invoices system is highly advised as you can keep safe and organize everything in the cloud for long years.
- WHAT INVOICES OR IMPORTANT DOCUMENTS ARE NEEDED TO KEEP?
The bottom line here is to have a better and accurate invoice management system to avoid any unwanted difficulties and stress, particularly on the tax filing process. It is your responsibility to prove your tax return filed. All the details you entered are considered your official statement. You have to meet what the IRS called the burden of proof to verify all your claims. Saving records as many as you can is the best strategy you can do to save your day.
Using a digital invoice maker to your business has a huge impact on business accounting as it keeps you on track on your expenses and in case that you get audited by tax authorities, all your needed data is ready and handy on your end. One rule that you have to consider that whenever you are in doubt, make it simple, KEEP IT! START TODAY because digitizing is the key.