| ACCOUNTING/Decades of Sensible Accuracy
- Software Decisions
- Management Use to Audit Reports
Long Do I keep My Records?
Below is a printout of the IRS comments on how long
to keep records regarding substantiating your income tax
In the following situations,
The period of limitations is:
|1. You owe additional
tax and situations (2), (3) and (4) below, do not
apply to you.
|| 3 years
|2. You do not report
income that you should report and it is more that
25% of the gross income shown on your return.
|| 6 years
|3. You file a fraudulent
income tax return
|| no limit
|4. You do not file
|| no limit
|5. You file a claim
for credit or refund after you file your return.*
|| Later of, 3
years, or 2 years after tax was paid
|6. Your claim is due
to a bad debt deduction.
|| 7 years
|7. Your claim is due
to a loss from worthless securities
|| 7 years
|* Individuals file a claim
for credit or refund on Form 1040X
versus a Review, versus an Audit
The minimum level of service that an
accountant can provide before submitting financial information
of a nonpublic entity to a client or others (such as
a bank). A compilation is limited to presenting (in
the form of financial statements and supplemental schedules)
information that is the representation of management
or the owner of a company. A CPA does not "audit"
or "review" information in the prepared financial
statements and/or supplemental schedules. Therefore,
a CPA does not express an opinion or any other form
of assurance on the financial statements or supplemental
schedules. The CPA is simply compiling and reporting
data provided to them from their client.
"review" involves more work and analysis than
a compilation. Similar to a compilation, a review presents
(in the form of financial statements and supplemental
schedules) information that is the representation of
management or the owner of the company. However, a review
will result in further work, such as inquiries of Company
personnel and analytical procedures applied to the financial
data. This type of engagement is substantially less
in scope than an "audit" of financial data.
Therefore in a "review" engagement (with the
limited scope of work performed) a CPA does not express
an opinion on the financial information or reports.
Audit:The next level of work that may be performed
on financial information is an "audit". The
objective of a financial audit is the expression of
an opinion regarding the financial statements taken
as a whole (for public or nonpublic companies). Therefore,
the CPA will write a report and express an opinion about
the company's adherence to accounting principles, assist
in confirming their accounts receivable balances, report
on going concern matters and more. The work requires
inquiry, analysis and other procedures.
VERSUS FINANCIAL AUDITS:
audit" performed by a CPA should not be confused
with or in any way related to the activity of an "income
tax audit". An income tax audit is requested
by a government agency, such as the Internal Revenue
Service. A CPA is a client's advocate in an income tax
audit. Therefore - Certified "Public" Accountant
- stands for someone working in the public's interest.
The CPA works for the public, not the government. Therefore,
a CPA works in the client's (public) interest to minimize
any additional tax or other assessments against the
client in an income tax audit.
| I started
my career working full-time as a bookkeeper to support
myself through college. Therefore, I understand accounting
from the ground-up! After over 20 years in the accounting
field, I can assist you with whatever accounting needs
The questions above will change
for each person asking the questions, as no two business
are the same. I tailor my assistance to you based upon
your needs and requests. Refers to the Links section
for links to other sites, such as QuickBooks software
and support. By the way, I am a QuickBooks Professional
Advisor and can assist you in setting up or modifying
company records on QuickBooks.
- What should I do and
consider when I start a new business?
- How do I keep my accounting
- What forms and identification
numbers do I need?
- Should I incorporate?
- What is the best way
to keep my records?
- How long do I keep my
- Can you finish the accounting
records for me if I write the checks and deposit the
income? (by the way; yes!)
- What do I do about paying
employees or should I hire independent contractors?
What is the difference?
There are many software choices available (with differing
costs, flexibility & specialties) depending on your
record keeping needs.
or Email with any questions!!