What records should a small business keep?
Financial records form the foundation. Keep all bank statements, credit card statements, and canceled checks. These prove your income and expenses if you ever face an audit. Save receipts for business purchases, especially anything over $75 and all travel and entertainment expenses. Invoices you send to customers and invoices you receive from vendors should stay on file as well.
Tax records include your filed returns and everything that supports them. W-2s and 1099s you issue and receive, depreciation schedules, home office calculations, mileage logs, and documentation for any deductions you claim. The IRS can audit up to three years back in normal cases and six years if they suspect significantly underreported income. Most accountants recommend keeping tax records for seven years to be safe.
If you have employees, keep payroll records, I-9 forms, W-4s, time records, and any employment contracts. Retention requirements vary by form type and state, but four years after the tax is due or paid covers most federal requirements.
Business formation documents should be kept permanently. Your articles of incorporation or organization, operating agreements, partnership agreements, EIN assignment letter, and any amendments belong in this category. Small businesses that grow and eventually sell or bring on partners will need these documents to prove ownership and legal structure.
Contracts and agreements need to stay on file for the duration of the agreement plus several years after completion. This includes client contracts, vendor agreements, leases, and loan documents. If a dispute arises years later, the contract is your protection.
Insurance policies, both current and expired, should be retained. Claims can come up after a policy period ends, and you need documentation of what coverage was in place at the time.
For project-based businesses, job-level records matter too. Estimates, change orders, purchase orders, and cost tracking by project help you understand which work made money and improve future pricing.
Paper records deteriorate and take up space. Digital copies work for most purposes as long as they are legible and you can produce them when needed. Use consistent naming conventions, back up files regularly, and keep sensitive documents secure. Working with a construction bookkeeper in American Fork or similar professional can help you build a system that keeps everything organized without taking over your office.
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More Questions
Where can I find a construction bookkeeper in American Fork?
TRUEquity Bookkeeping is based in American Fork and specializes in construction accounting. The firm works with contractors, tradespeople, and home builders throughout Utah Valley, with a focus on job costing that shows profitability at the project level.
Read answerShould I use QuickBooks Online or Desktop for construction?
QuickBooks Online is the better choice for most construction businesses today. The mobile access, cloud collaboration, and job costing features make it ideal for contractors who need to track costs from the field.
Read answerHow do I handle warranty work in my books?
Track warranty work as a separate job or customer in your accounting software so you can see total warranty costs clearly. Code all labor, materials, and drive time to that job just like any other project.
Read answerHow do I run job profitability reports in QuickBooks?
In QuickBooks Online, search Reports for Job Profitability Summary or Profit and Loss by Customer. In Desktop, look under Reports > Jobs, Time & Mileage. The harder part is making sure your costs are properly assigned to each job so the numbers actually mean something.
Read answerHow do I track materials and supplies by job?
Tag every material purchase to a specific job at the time of purchase. Write the job name on receipts, set up job references with suppliers, and enter expenses in your accounting software with job assignments. This gives you accurate job costs instead of guesswork.
Read answerWhy are my job cost estimates always wrong?
Job cost estimates typically miss because you're not learning from completed projects. Without tracking actual costs by phase and cost code, every new estimate relies on gut feeling rather than real data from your own jobs.
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