accounting records
Definition
Accounting records are all the financial documents and data your business keeps to track money coming in and going out, including invoices, receipts, bank statements, payroll records, and tax filings. The law requires businesses to maintain these records for a certain number of years so that owners, auditors, or courts can verify the financial history of the company.
Example
If the IRS decides to audit your bakery, they can ask to see your accounting records from the past several years to confirm that the income and expenses on your tax returns are accurate.
Watch Out
Most businesses are legally required to keep accounting records for at least three to seven years, and throwing them away too soon can create serious problems during an audit or lawsuit.
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This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.