financial records
Definition
Financial records are all the documents that track money moving in and out of your business, including invoices, receipts, bank statements, tax returns, payroll records, and accounting ledgers. Courts, government agencies, and lenders treat these documents as the official evidence of your business's financial history and health.
Example
If the IRS audits your business, they will ask to see your financial records to verify that the income and expenses on your tax return actually match what happened in your bank account.
Watch Out
Most laws require businesses to keep financial records for at least three to seven years, so throwing them out early can create serious legal and tax problems.
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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.