Robert Duitz, a San Jose, CA Enrolled Agent (EA) says the IRS’ biggest area of non-compliance is small businesses, and small businesses are the most likely to be audited. Of audits where Duitz has represented clients, 90% were small businesses. So be prepared! He offers a flyer that lists how long you should keep different types of records. Here’s a small sample:
All self-employed business records, including:
– Bank statements
– Deposit slips
– Income records
– Accounting & bookkeeping records
– Expense records and receipts
IRS Publication 583 goes into detail on Starting a Business and Keeping Records.
You should also be aware of personal record-keeping requirements, found in Publication 552.
Duitz recommends the IRS Small Business Resource Guide CD, which you can order for free (up to 5 copies) from the IRS website.