As a self-employed individual, it's important to keep track of your income and expenses for tax purposes. This means keeping receipts and invoices for all of your business-related purchases. But how long do you need to keep these records?
The answer depends on a few factors, including the type of expense and the tax laws in your country or region. In general, it's a good idea to keep receipts and invoices for at least three years. This is because the tax authorities can audit your tax return for up to three years after it's filed. If you're audited and you don't have receipts to back up your expenses, you could end up paying additional taxes.
It's also a good idea to keep receipts and invoices for longer than three years if they relate to assets that will be used for more than one year, such as equipment or property. In this case, you'll need to keep the records until you dispose of the asset. For example, if you buy a computer for your business and you plan to use it for five years, you'll need to keep the receipts for at least five years.
In addition to receipts and invoices, it's also important to keep other records related to your business, such as bank statements and records of income. These can help you accurately track your income and expenses, and they can provide valuable information if you're audited.
Oftentimes, storing receipts for your business expenses digitally is the easiest way to go. This is what the majority of self-employed individuals do now and it's a great option for real estate agents. When using an app like Symba, you can attach a picture of a receipt to the banking transaction and it will be stored forever.
In conclusion, as a self-employed individual, it's important to keep receipts and invoices for at least three years. This will help you accurately track your business income and expenses, and it will protect you in the event of an audit. It's also a good idea to keep receipts and invoices for longer than three years if they relate to assets that will be used for more than one year. By keeping accurate records, you can ensure that your tax return is accurate and you can avoid any potential issues with the tax authorities.