Since many common business documents must be retained in accordance with federal law, here is a list of how long common documents must be kept.

2 Years

• General Correspondence
• Bank Reconciliations

3 Years

• Employee Applications
• Purchase orders
• Requisitions
• Sales Contracts
• Sales Invoices

4 Years

• Expired Policies (All types)
• Settled Insurance Claims
• Export Declarations
• Freight Bills
• Manifests
• Waybills
• Bills of Lading

5 Years

• Benefits
• Safety Reports

6 Years

• Internal Audit Reports
• Accident Reports
• File Inspection Reports
• Insurance Polices

7 Years

• AP/AR Ledger
• Expense Reports
• Petty Cash Records
• Accident Reports (HR)
• Attendance
• Personal Files – After Termination
• Time Reports
• Routine Correspondence

8 Years

• Salary Hours
• Group Disability Reports
• Safety Reports

10 years

• Payroll records after termination
• Claims – After Settlement

Permanently

• Cash Disbursements / Receipts
• Chart od Accounts
• Depreciations Schedule
• Financial Statements
• General Ledger
• Inventory Records
• Journal Entries
• Tax Returns
• Personal Files- Current Employees
• Articles of Incorporation
• Audit Reports – External
• Contracts
• Copyrights, Trademarks, Patents
• Correspondence – Legal/Tax
• Mortgages, Licenses, Deeds
• Organizational Charts
• Partnership Agreements

This list is not a full listing of everything. If you are unsure about how long to keep a document. Ask your tax advisor.

If you do not have a tax advisor. Capital Advisory Group, Inc. is here to answer your questions.

Need to know what to keep personally- see our How Long Do I keep That?

Alimony paid will no longer be tax-deductible and alimony received will no longer be taxable income. For decades, alimony — typically paid by men — has been tax deductible for the person paying it and taxable income for the person receiving it (typically women). But that basic tenet of divorce will no longer apply this year and beyond, due to provisions in the big 2017 tax law.

Know the good from the bad. With the new laws, you, your spouse, both attorneys and any financial advisor the two of you will use should be looking at all the angles. Know the good assets from the bad assets, tax-wise.

Since the New Tax Law changes are now in effect it is wise to speak to a tax advisor who can let you know how the changes affect you in 2019.

Capital Advisory Group, Inc. will help you navigate through these changes.

Call (636) 394-5524

IRS Tax Reform Tax Tip 2018-143

September 13, 2018

Retirees should do a Paycheck Checkup to make sure they are paying enough tax during the year by using the Withholding Calculator, available on IRS.gov. The Tax Cuts and Jobs Act, enacted in December 2017, changed the way tax is calculated for most taxpayers, including retirees.

Because of this law change, retirees who receive a monthly pension or annuity check may need to raise or lower the amount of tax they pay in during the year. The easiest way to do that is to use the Withholding Calculator or read Publication 505, Tax Withholding and Estimated Tax. Though primarily designed for employees who receive wages, this online tool can also help those who receive pension or annuity payments on a regular schedule, usually monthly or quarterly.

Taxpayers who do not choose to have taxes withheld from their income should make estimated tax payments. This income includes pension and annuity income, and the taxable part of social security benefits. Estimated tax payments are due quarterly. The remaining due dates for 2018 payments are Sept. 17, 2018 and Jan. 15, 2019. Taxpayers can pay their taxes anytime throughout the year as long as they indicate the tax year and where to apply the payment. They can visit IRS.gov/payments to explore all IRS payment options.

Here are some things retirees should know about their withholding and using the calculator:

• Like employees, retirees can use the calculator to estimate their total income, deductions and tax credits for 2018.

• When using the Withholding Calculator, retirees should treat their pension like income from a job by entering:
  • The gross amount of each payment
  • How often they receive a payment, such as monthly or quarterly
  • The amount of tax withheld so far this year

• Before using the calculator, users should have a copy of last year’s tax return. In addition, knowing or having a record of the total federal income tax withheld so far this year will also make the tool’s results more accurate.

• Based on the taxpayer’s responses, the Withholding Calculator will recommend the number of allowances a pension recipient should claim. If the number is different from the number they are claiming now, they should fill out a new withholding form. If claiming zero allowances still doesn’t cover their expected tax bill, the tool will recommend asking their payor to withhold an additional flat-dollar amount from each pension payment.

• Pension recipients can make a withholding change by filling out Form W-4P, and giving it to their payor. The IRS urges retirees to submit Forms W-4P to their payors as soon as they can. This gives payors time to apply withholding changes to as many payments as possible this year.

• Because of the limited time left in 2018, some retirees may be unable to adequately cover their expected tax liability through withholding. In that case, a taxpayer could instead make an estimated or additional tax payment directly to the IRS.

More Information:

Publication 505, Tax Withholding and Estimated Tax

Social Security Administration

Tax Reform

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IRS Tax Reform Tax Tip 2018-142

September 12, 2018

The U.S. tax system operates on a pay-as-you-go basis. This means that taxpayers need to pay most of their tax during the year, as the income is earned or received. Taxpayers must generally pay at least 90 percent of their taxes throughout the year through withholding, estimated or additional tax payments or a combination of the two. If they don’t, they may owe an estimated tax penalty when they file.

Taxpayers can pay their taxes throughout the year anytime. They must select the tax year and tax type or form when paying electronically. Filers paying by check should make it out to the “United States Treasury” and indicate the tax year and type of taxes they are paying.

Taxpayers who pay taxes through a combination of withholding and estimated tax payments should do a Paycheck Checkup. They can do a checkup using the Withholding Calculator on IRS.gov. Doing so now can help the taxpayer avoid an unexpected tax bill and possibly a penalty when the taxpayer’s 2018 tax return is filed next year.

Here are some examples of people who may need to make estimated tax payments:

Individuals – including sole proprietors, partners and S corporation shareholders – may need to pay quarterly installments of estimated tax if:

• they expect to owe at least $1,000 when they file their tax return
• they owed additional tax when they filed their tax return last year

Other taxpayers who may need to make estimated payments include those who:

• have more than one job, but don’t have each employer withhold taxes
• are self-employed
• are independent contractors
• are representatives of a direct-sales or in-home-sales company
• participate in sharing economy activities where they are not working as employees

For tax year 2018, the remaining estimated tax payment due dates are Sept. 17, 2018 and Jan. 15, 2019.

More Information:

Publication 505, Tax Withholding and Estimated Tax

Form 1040-ES, Estimated Tax for Individuals

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September 11, 2018

The IRS urges everyone who works as an employee and who also has income from other sources to perform a Paycheck Checkup now. For example, certain individuals often need to pay estimated or additional tax. This includes taxpayers who have certain types of income from the sharing economy, interest, dividends, self-employment, capital gains, or prizes and awards. A Paycheck Checkup can help these taxpayers avoid an unexpected year-end tax bill and possibly a penalty when they file their 2018 tax return next year.

Individuals can do a checkup using the Withholding Calculator on IRS.gov or read Publication 505, Tax Withholding and Estimated Tax. This is especially important in 2018 due to tax changes taking effect this year. These changes are part of the Tax Cuts and Jobs Act

Here are some things for employees with other sources of income to consider:

• Taxpayers usually must pay at least 90 percent of the tax they owe during the year through withholding, estimated tax payments or a combination of the two. An estimated tax penalty will normally apply to a taxpayer who pays too little tax.

• Taxpayers can use their results from the calculator to help fill out their Form W-4 and adjust their income tax withholding. Taxpayers should submit their new W-4 to their employer as soon as possible.

• Many employees who also receive income from other sources may be able to forgo making estimated tax payments. They can instead increase the amount of income tax withheld from the paychecks they earn as an employee by claiming fewer withholding allowances on their Form W-4.
• In some cases, changing withholding allowances alone doesn’t result in enough taxes withheld. If this happens, a taxpayer can also use the Form W-4 to ask their employer to withhold an additional flat-dollar amount each pay period.
• For taxpayers who do need to make estimated payments, Form 1040-ES, Estimated Tax for Individuals, can help taxpayers figure these payments. It includes a useful worksheet for figuring the right amount to pay. Taxpayers can go to gov/payments for information on all payment options.

More Information:

Tax Reform

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Below are three fall tax tips for small business owners to consider and ask their tax professional about:

1. Spend money. Time is running out in 2018, so don’t shy away from spending money on your business to maximize deductions. Do you need to upgrade your equipment? Is it time to spend more on advertising? Can you make vendor payments now, as opposed to waiting until the new year? If you can buy it in 2018, you might as well do so.
2. Get organized. You may have plenty of time right now, but you know how busy things can get when the holiday season arrives and the end of the year begins to close in. By getting organized now, you can avoid a hectic situation in the future. From gathering receipts to running reports, there are things you can do well in advance of the new year.
3. Plan on ways to decrease revenue in December (and maybe even November). This sounds crazy, as every company shares the goal of increasing revenue month over month. However, if you can defer payments from December to January, you can effectively reduce your 2018 tax bill.

You don’t have to follow these tax tips in September. You may not even get around to it in October. But remember, the end of the year is coming soon and you will eventually run out of time to improve your tax situation.

As a small business owner, one or more of these tips may help reduce your tax bill for the current year.

The most successful business owners have a Tax Strategy Plan in place before the year begins so they are never reacting but instead having a proactive Tax Strategy in place throughout the year.

Capital Advisory Group, Inc. can certainly help you maximize tax savings for the 2018 tax year. Plan ahead for 2019 and schedule your Tax Strategy Planning Session Today. (636) 394-5524