Hello,
I've started a small on-line business, buying and selling music CDs. I usually keep totals for sales and receipts for purchases for each month, but do not keep records for individual CD sales. My question is whether I need to keep records for purchases and sales of each individual music CD or are monthly/annual summaries adequate documentation?
Thank you!
According to IRS, purchases, sales, payroll, and other transactions you have in your business will generate supporting documents. Supporting documents include sales slips, paid bills, invoices, receipts, deposit slips, and canceled checks.
Specifically to your question, you should keep a record of each purchase and sale in the course of your business. If you are using a credit card for purchases, the credit card statements qualify as satisfying the record keeping requirements. You ay be using a merchant processor to accept credit card as payments for your sales, that will satisfy the record keeping requirements for sales. Any online account that you are using to sell will have a list of account transactions and that is a way to satisfy record keeping requirement.
Basically, anything that can provide details of the income and expenses incurred in your business is qualified for record keeping.
Documents for gross receipts include the following:
Documents for purchases include the following:
What kind of records should I keep