If you’ve just made the switch to a paperless A/P department, you’ll want to make sure your files are all prepared correctly. Otherwise, you could be setting yourself up for trouble if the feds come knocking.
The Small Business/Self Employed division of the IRS just rolled out details on exactly how electronic records must be turned over when its auditors make info requests. So, if you recently made the switch to paperless, you’ll want to review this list.
Businesses that receive an Information Document Request (IDR) from the IRS must meet the following criteria if they use e-records:
- Backup files must be presented on a CD, DVD or USB drive (also known as a flash drive)
- Electronic data that’s converted to an Excel spreadsheet can’t be used in all cases
- New, modified or reconstructed records can’t be used
- A backup of the records of original entry must be submitted, and
- The username and password of the administrator of the records must be submitted.