You should keep them in an orderly fashion and in a safe place. It is important to keep these documents because they support the entries in your books and on your tax return. These documents contain the information you need to record in your books. Supporting documents include sales slips, paid bills, invoices, receipts, deposit slips, and canceled checks. Purchases, sales, payroll, and other transactions you have in your business will generate supporting documents. For more detailed information refer to Publication 583, Starting a Business and Keeping Records. All requirements that apply to hard copy books and records also apply to electronic records. The electronic accounting software program or electronic system you choose should meet the same basic recordkeeping principles mentioned above.

Some businesses choose to use electronic accounting software programs or some other type of electronic system to capture and organize their records. For most small businesses, the business checking account is the main source for entries in the business books. Your books must show your gross income, as well as your deductions and credits. This summary is ordinarily made in your business books (for example, accounting journals and ledgers).

Your recordkeeping system should include a summary of your business transactions. The business you are in affects the type of records you need to keep for federal tax purposes. You may choose any recordkeeping system suited to your business that clearly shows your income and expenses.

List of business expenses for taxes