Most tax records only need to be kept for 3 years under IRS rules, but if you file in California, plan on at least 4. Some records you should keep much longer, and a few you should never throw away. Here’s how long to keep what, so you’re ready if the IRS or the Franchise Tax Board ever asks.
The short answer
The IRS’s rule is to keep the records that support your income, deductions and credits until the “period of limitations” for that return runs out. That’s the window in which you can amend the return, or the IRS can come back and assess more tax. For most returns, it’s 3 years. That means if you get audited, the IRS can generally go back 3 years.
California gives itself an extra year. The Franchise Tax Board usually has 4 years from the due date of the return, or the date you filed it, to examine it. So for Californians, 4 years is the real minimum.
Many bookkeepers, me included, suggest keeping supporting records for 7 years. It covers almost every situation below, and it’s simpler than tracking a different deadline for every document.
How long to keep each type of record
Situation or record
How long to keep it
Tax returns and supporting records, normal situation (federal)
3 years from filing
California returns and supporting records
4 years from the due date or filing date
You filed a claim for a credit or refund after filing
3 years from filing or 2 years from paying the tax, whichever is later
Payroll and employment tax records
At least 4 years after the tax is due or paid, whichever is later
You left out income of more than 25% of the gross income on your return
6 years
You claimed a loss from worthless securities or a bad debt deduction
7 years
Records for property and equipment you own
As long as you own it, plus the limitation period for the year you sell or dispose of it
You didn’t file a return, or filed a fraudulent one
Indefinitely
Copies of your filed tax returns
Permanently (recommended)
The time limits count from when the return was filed. A return filed early is treated as filed on its due date.
Keep these permanently
Some documents are worth keeping for as long as the business exists, and then some:
Copies of every tax return you’ve filed
Formation documents: articles of organization or incorporation, operating agreements, EIN letters
Year-end financial statements and general ledgers
Records for property, equipment and other fixed assets until the limitation period ends for the year you sell them. You need them to figure depreciation and your gain or loss when you sell.
What about receipts?
Bank and credit card statements show nearly every transaction, so you don’t need to hand every receipt to your bookkeeper. The receipts I need are for cash purchases, large purchases that have to be split across several categories, and fixed asset purchases. Keep the rest yourself for the retention periods above, in case of an audit.
The IRS expects receipts for business travel, gift and car expenses of $75 or more, and for lodging at any amount.
Before you shred anything
Tax rules aren’t the only reason to keep records. Your insurance company, lender, landlord or investors may require you to keep some documents longer than the IRS does. Check before you shred.
When it’s time, shred paper records instead of tossing them. They’re full of account numbers and other personal information.
Paper or digital?
Digital copies are fine, as long as they’re clear, complete and easy to find. Scan paper receipts and statements, name the files consistently, and organize them in folders by year and category. Back everything up in at least two places, such as an external drive and a cloud service.
Frequently asked questions
How long should I keep tax records in California?
At least 4 years. The Franchise Tax Board usually has 4 years from the due date of the return, or the date it was filed, to examine it. That’s a year longer than the IRS’s standard 3 years.
How long should I keep payroll records?
At least 4 years after the tax is due or paid, whichever is later. That includes pay records, timesheets and payroll tax filings.
Do I need to keep tax returns forever?
It’s a good idea. Old returns help when you prepare new ones, amend a return or apply for a loan, and they take up very little space as digital files.
What if I never filed a return for a year?
There’s no time limit on that year, so keep every record for it indefinitely. If you’ve fallen behind, read how to get caught up.
Need help organizing your records?
If your records are scattered across shoeboxes, inboxes and old hard drives, I can help you set up a simple system that keeps everything where you can find it. Book a free call.
You don’t have to become an accountant to keep your own books. I’ll teach you to handle your day-to-day bookkeeping in QuickBooks Online. Then I’ll review your file every month or quarter, so mistakes get caught long before tax time. And if something goes wrong in between, I’m here to fix it.
It’s a good fit if you want to stay close to your numbers without paying for full-service bookkeeping.
How the training works
Most QuickBooks courses teach every feature. You don’t need every feature. You need the handful that run your business.
Built around your business. We start with what you actually do: sending invoices, paying vendors, tracking project costs, sales tax, whatever applies. We skip the parts of QuickBooks you’ll never use.
Practice on your own books. We work in your real company file with your real transactions, so what you learn sticks.
Set up right from the start. If your chart of accounts, bank feeds or rules need cleanup, I fix them first, so you’re learning on a file that works.
Plain-English answers. You’ll learn why each entry goes where it does, not just which button to click.
Remote, at your own pace. Sessions are held over Zoom, so you can learn from anywhere. There’s no fixed number of sessions. Some people pick it up quickly and others need more time, so we go at your pace. All training is in QuickBooks Online.
By the end, you’ll be able to categorize transactions, reconcile your accounts, send invoices and run the reports you need to understand how your business is doing.
Then I review your file, monthly or quarterly
Once you’re comfortable, you keep the books and I check them on a schedule that suits you. A review usually covers:
Bank and credit card reconciliations, done and balanced
Uncategorized or miscategorized transactions
Duplicate entries and transactions recorded in the wrong period
Unpaid invoices and bills that need attention
Vendors you’ll need to send 1099s to
Owner draws, loans and transfers recorded correctly
A quick read of your Profit & Loss and Balance Sheet for anything that looks off
I fix what needs fixing and show you anything you’ll want to do differently next time. By tax season, your books are already clean, so your CPA spends less time, and you pay less.
And I’m here when something goes wrong
Bank feeds break. A payment lands in the wrong account. Your CPA needs a report by Friday. When errors or emergencies come up between reviews, reach out and I’ll sort it out with you. You don’t have to wait for the next scheduled review.
Who this is for
Artists, designers, photographers and other creative professionals who want to understand their own numbers
Small business owners who’d rather do the daily entries themselves and save on bookkeeping fees
Anyone who’s tried QuickBooks, gotten frustrated, and wants someone to make it make sense
New businesses setting up QuickBooks for the first time
If you’re already behind, start with getting caught up. Then we can move you to training and reviews once your books are current.
Getting started
Book a free call and tell me about your business and where your books stand. I’ll suggest a training plan and a review schedule that fits.
Frequently asked questions
Do I need to know accounting to learn QuickBooks?
No. I teach the bookkeeping you need in plain language, using your own transactions. You’ll learn what each entry means as you go.
How often should my books be reviewed?
Monthly works best for most businesses with regular activity, since problems get caught while they’re small. Quarterly can be enough for a quieter business or a sole proprietor with few transactions.
What happens if I make a mistake between reviews?
Reach out. I can fix errors and help with urgent problems at any time, not just at your scheduled review.
Is training part of your bookkeeping service?
Training is its own service. You can pair it with monthly or quarterly reviews, or choose full-service bookkeeping instead if you’d rather not do the entries yourself.
QuickBooks Online can track a production’s budget, commitments and cost-to-date, and still give your CPA real financial statements at the end. I’ve set up QuickBooks for indie features, documentaries, commercials, music videos and short-form projects for more than 20 years. This guide walks through the setup I use, step by step.
Is QuickBooks Online the right tool for your production?
For most independent productions, yes. QuickBooks Online handles budgets of a few hundred line items, crew and vendor payments, petty cash and payroll entries well.
Large union features with many departments usually run on dedicated production accounting software through a production payroll company. Even then, many producers keep the company’s overall books in QuickBooks.
One thing to know up front: QuickBooks won’t work exactly like your budgeting software. It’s built to run a whole business. Set up the right way, though, it mirrors your budget’s account numbers and shows you budget vs. actual at any point in the shoot.
Step 1: Decide whether you own the film or it’s a work for hire
This one question shapes the whole setup, so answer it before you create a single account.
You own the finished film. This is typical when an LLC or partnership is formed to make one picture. The film is an asset of whoever owns it. Your goal is tracking the cost of making it, not monthly profit. Here, the budget itself becomes your chart of accounts (Step 2).
It’s a work for hire. You’re producing for a client, a network or a brand, and you don’t own the result. Commercials, music videos and branded content usually fall here. The production costs are direct costs of the job (Cost of Goods Sold). Keep normal overhead accounts for rent, insurance and office costs. Put the detailed budget in your Products & Services list instead (Step 3), and track each job as a separate Project.
Production companies that make several projects a year often have both kinds. Your CPA should confirm the tax treatment for each production before you set it up.
Step 2: Build your chart of accounts from the budget
If the company exists to make one film, set up your budget lines as expense accounts in the chart of accounts. Your reports then read just like your budget.
Number everything. If your budget lines aren’t numbered, add a 3- or 4-digit scheme first. Then turn on account numbers in QuickBooks Online: Settings, then Account and settings, then Advanced, then Chart of accounts. Without numbers, QuickBooks Online sorts accounts alphabetically and your reports won’t follow the budget.
Import from Excel instead of typing. Export the budget from your budgeting software to Excel. Clean it up into columns for account number, account name and account type, then import it into the chart of accounts.
Make categories parents and detail lines sub-accounts. Each budget category (for example, 2000 Production Staff) is a parent account. Each detail line under it is a sub-account, so totals roll up the way your budget does.
Record funding as equity or loans, not sales. Investor money, member contributions and loans go to balance sheet accounts such as Production Funding. Add a sub-account for each source if several parties are contributing.
Clean out the defaults. Make QuickBooks’ default expense accounts that you won’t use inactive so they don’t clutter your reports.
Watch the account limit. Simple Start, Essentials and Plus allow 250 active accounts in total. A detailed feature budget can go past that. If yours does, keep category-level accounts in the chart and put the detail lines in Products & Services (Step 3), or move to QuickBooks Online Advanced, which has no limit.
Step 3: Set up Products & Services to match your budget lines
If you want purchase orders, or you’re tracking a work-for-hire job, set up your budget lines as service items in the Products & Services list.
Name each item with its budget number and description, for example “2105 Camera Operator.”
Check “I purchase this product/service from a vendor” and choose the expense or Cost of Goods Sold account the item should post to. QuickBooks only lets you put items marked this way on a purchase order.
Like the chart of accounts, this list can be imported from Excel.
Once your budget is set up in a QuickBooks file, export both lists and save them. You can import them into the next production’s file in minutes.
Step 4: Enter the budget
On QuickBooks Online Plus or Advanced, enter your budget totals in the Budgeting tool. Then run the Budget vs. Actuals report for cost-to-date and variance by line.
QuickBooks budgets are laid out by month across a fiscal year. You can enter each line’s total in the month the money will be spent, or spread it across your prep, shoot and post schedule.
On Advanced, you can also add a cost estimate to a Project and run the Estimates vs. actuals report. This works well for work-for-hire jobs, where you track several productions in one file.
Step 5: Issue purchase orders, then enter bills against them
Purchase orders let you see what you’ve committed to spend before the invoices arrive. They’re available on Plus and Advanced. Turn them on in Settings, then Account and settings, then Expenses.
Enter a PO for each crew deal, rental or vendor commitment. For weekly payments, put each week on its own line so you can see what’s paid and what’s still owed.
Enter the vendor’s invoice as a bill and add the PO to it. QuickBooks closes the lines you’ve billed and leaves the rest open.
Pay the bill by check printed from QuickBooks, by bill pay or by wire. If you’re entering a production after the fact, record the payment against the bill the way it was actually paid.
Watch your commitments. The Open Purchase Order Detail report shows everything you’ve promised but not yet been billed for.
Printing checks from QuickBooks posts them to your actuals as you go. It saves data entry and makes reconciling much faster.
Step 6: Handle credit cards and petty cash correctly
Credit cards. Anything paid by credit card is entered as an expense from the credit card account, not as a bill. It’s often easiest to match these from the bank feed. Paying the card later is a transfer from the bank to the card, not a second expense.
Petty cash. Create a Petty Cash bank account with a sub-account for each person who gets a float. That way you can see what’s outstanding at any time.
Issuing a float is a transfer or check from the production bank account into that person’s petty cash account.
Each envelope is entered as an expense from their petty cash account, with the envelope number as the reference number. Split it across as many budget lines as the receipts cover.
When they replenish or close out, the petty cash balance should equal the cash they hand back.
Step 7: Record payroll from your payroll company’s reports
Most production payroll companies can give you a payroll journal coded to your budget accounts, or a file you can import. Give them your account numbers, then record each payroll run as a journal entry or import. Wages, fringes and payroll fees each go to their own budget lines.
Don’t skip reconciling
Reconcile every bank account, credit card and loan in QuickBooks each time a statement comes in. It’s the only way to know every transaction is recorded and every balance is right. Keystroke errors happen, and banks and vendors make mistakes too. On a production, a missed charge means your cost report is wrong.
Which QuickBooks Online plan do you need?
For most productions, Plus is the minimum, because it adds purchase orders and budgets.
Feature
Simple Start
Essentials
Plus
Advanced
Chart of accounts
250
250
250
Unlimited
Purchase orders
No
No
Yes
Yes
Budget vs. Actuals
No
No
Yes
Yes
Project cost estimates vs. actuals
No
No
No
Yes
Classes and locations
None
None
40 combined
Unlimited
Intuit changes plans from time to time, so check the current plan details before you buy.
Want help setting up your production?
If you’d rather skip the setup, send me your budget in Excel. I’ll quote a price based on how many accounts and detail lines it has. I’ll then set up your chart of accounts and Products & Services list in QuickBooks Online, ready for you to start entering costs.
I also offer ongoing production bookkeeping, and QuickBooks training as a separate service. See Film Production Accounting for what I do for productions, or book a free call.
Frequently asked questions
Can QuickBooks Online replace production accounting software?
For many independent features, documentaries, commercials and music videos, yes. It tracks budget vs. actual, commitments, petty cash and payroll costs. Large union productions usually still use dedicated production accounting software, often alongside QuickBooks for the company’s overall books.
Which QuickBooks Online plan do I need for a film?
Plus at minimum, because purchase orders and budgets aren’t in Simple Start or Essentials. If your budget has more than about 250 lines, or you want project cost estimates vs. actuals, you’ll need Advanced, or you’ll need to keep detail lines in Products & Services.
Should production funding be recorded as income?
Usually not when you own the film. Investor money, member contributions and loans are recorded on the balance sheet, so your reports show the cost of the film instead of a profit or loss. Work-for-hire payments from a client are income. Confirm the treatment with your CPA.
Can you set up QuickBooks from my existing budget?
Yes. Export the budget from your budgeting software to Excel and send it to me. The account numbers and descriptions become your QuickBooks chart of accounts or Products & Services list, so your reports line up with the budget.
If you’ve fallen months or even years behind on your bookkeeping, you’re not alone, and you’re not in as much trouble as you might think. Some of my clients came to me with shoeboxes of receipts, years of unopened statements and no tax preparer. Every one of them got caught up. Here’s how it works, and how to take the first step.
Why people fall behind (and why it’s not a character flaw)
Most people fall behind for ordinary reasons: a busy season, a big project, a life change, or simply not knowing where to start. Creative professionals and small business owners are especially busy doing the work that actually earns money. The longer it goes, the more overwhelming it feels, so it gets put off again. Breaking that cycle starts with one small step.
What happens if you stay behind
You can’t see whether you’re actually making money, or where it’s going
You may miss deductions you’re entitled to, and pay more tax than you need to
Tax penalties and interest can keep growing the longer returns go unfiled
Getting a loan, a lease or investors is much harder without current financial statements
Each year you wait adds another year to catch up
How catch-up bookkeeping works
1. Gather what you have
Don’t wait until everything is perfectly organized. Bank and credit card statements are the foundation, and most can be downloaded online. Add any invoices, payroll records, loan statements and receipts you have, even if they’re a mess.
2. Rebuild the books, one month at a time
Every transaction gets recorded and categorized, and every bank and credit card account gets reconciled so the books match your statements to the penny. This is where experience matters: knowing how to categorize correctly for your type of business and entity saves money and headaches at tax time.
3. Find what you’ve been missing
Catching up often uncovers business expenses that were never recorded. For artists and creative professionals, some expenses may be legitimate business deductions depending on your profession, and capturing them can lower your tax bill.
4. Hand clean records to your tax preparer
Once the books are current, your CPA or enrolled agent can prepare and file any returns you need. If you don’t have a tax preparer, I can connect you with a trusted CPA or enrolled agent and work alongside them to get you caught up.
5. Stay current
The goal isn’t just to catch up once. With monthly bookkeeping, your books stay current, so you always know where you stand and tax time is no longer stressful.
Questions people ask
How far behind is too far behind to fix?
There’s no such thing. I’ve helped clients catch up on several years of books at once. The process is the same, and it’s always better to start now than to wait.
Do I need my receipts to catch up my books?
Not necessarily. Most catch-up work starts with your bank and credit card statements, which show nearly every transaction. The only receipts I need from you are for cash purchases, since the receipt is the only record of them; large purchases that need to be split across several categories; and fixed asset purchases, such as equipment or furniture. You can keep the rest in case of an audit. The IRS expects receipts for business travel, gift and car expenses of $75 or more, and for lodging at any amount.
I haven’t filed taxes in years. Who should I call first?
Start with your books. A tax preparer needs accurate numbers before they can file, so getting your records caught up is the first step. If you don’t have a tax preparer, I can connect you with a trusted CPA or enrolled agent and work alongside them.
How long does catch-up bookkeeping take?
It depends on how many years and accounts are involved and how organized your records are. A single year for a small business can often be done in a few weeks. I’ll give you a realistic timeline after a free consultation.
The hardest part is starting
With more than 20 years as an accountant, full-charge bookkeeper and QuickBooks ProAdvisor, I’ve seen every kind of bookkeeping backlog, and there’s no judgment here. Schedule a free 15-minute consultation and we’ll figure out a plan to get you caught up.
So, you need a bookkeeper to organize your financial records, prepare accurate books for your tax preparer, and ensure your taxes are filed correctly. You might be thinking, “Anyone can do that, right?” While many individuals call themselves “bookkeepers,” the reality is that experience and expertise vary widely. Choosing the right bookkeeper can make a significant difference in your business’s financial health and overall success.
The Difference Experience Makes:
Imagine hiring someone to build a house who has only watched a few DIY videos. Would you trust them with the foundation? The same principle applies to bookkeeping. Many individuals enter the field with limited training or practical experience. An inexperienced bookkeeper is likely to do more damage than good, and wastes your time. In contrast, a full-charge bookkeeper is efficient and brings a wealth of knowledge and skills.
Accounting has been my lifelong career. My foundation began with intensive training at CPA and Business Management firms while pursuing accounting studies at UCLA. This combination solidified my understanding of accounting principles and tax regulations. I apply the principles taught to me by the top business managers directly to your bookkeeping. I worked my way up to managing the tax department before transitioning to private accounting and eventually launching my own practice. This diverse experience has equipped me with a deep understanding of complex tax deductions and strategies for serving a wide range of businesses and maximizing savings, enabling me to analyze your finances beyond basic data entry and uncover opportunities and potential risks.
Beyond Data Entry: Meaningful Insights and Solutions:
A skilled bookkeeper can provide far more than just accurate financial records. We can offer valuable insights into your business’s performance through meaningful reports and Key Performance Indicators (KPIs). These tools can help you identify trends, track progress, and make informed decisions to improve efficiency and profitability.
Unlike inexperienced bookkeepers who may create more problems than they solve, I am solutions-oriented. I thrive on identifying and resolving financial challenges, ensuring your business runs smoothly and efficiently.
The Power of Full Accounting Cycle Expertise:
Leverage my full accounting cycle expertise to elevate your business beyond day-to-day bookkeeping. I provide crucial support in:
Developing Business Plans: Gain a competitive edge with data-driven business plans and insightful financial analysis. My Excel expertise allows me to create dynamic visualizations and projections.
Reporting to Investors or Business Partners: Deliver clear, transparent financial reports that meet investor standards and provide actionable insights.
Securing Bank Loans: Strengthen your loan applications with accurate and comprehensive financial statements.
Securing Financial Aid: Navigate complex forms, reports and applications for grants and financial aid.
Prepare for Legal Proceedings: Ensure your books are up to date for accurate completion of required legal forms and reports.
Protect Assets & Inventory: Your hard-earned assets and valuable inventory are the lifeblood of your business. Simply knowing what you should have isn’t enough – you need systems in place to ensure it’s all accounted for and secure. I implement robust tracking in QuickBooks (and other systems) to provide visibility and identify potential loss or theft.
If you’re looking for a trusted and experienced bookkeeper, contact me today for a consultation. Let’s discuss how my expertise can transform your business’s financial health and contribute to your overall success.
Accurate and up to date bookkeeping provides business owners with the financial data they need to make timely & informed business decisions. I’m passionate about enabling creative entrepreneurs to take control of their finances.