What records should a small business keep?

Essential Records for Small Businesses in Michigan

Maintaining organized and accurate records is crucial for small businesses operating in Michigan. Proper recordkeeping supports compliance, simplifies tax filing, and aids in operational decision-making.

Key Business Records to Keep

• Business Formation Documents: Keep copies of your Articles of Organization, partnership agreements, or incorporation certificates issued by the Michigan Department of Licensing and Regulatory Affairs (LARA).
• Licenses and Permits: Retain all relevant state and local business licenses and permits required for your industry and location.
• Financial Records: Maintain detailed records of income, expenses, invoices, receipts, bank statements, and credit card transactions. This supports bookkeeping, tax reporting, and cash flow management.
• Payroll Records: Document employee wages, hours worked, tax withholdings, and benefits. Michigan employers must comply with state payroll tax and reporting requirements.
• Tax Documents: Preserve copies of federal, state, and local tax returns, payment confirmations, and correspondence with tax authorities.
• Contracts and Agreements: Store signed contracts with clients, vendors, and employees to track obligations and protect your business interests.
• Insurance Policies: Keep records of liability, workers’ compensation, and other insurance coverage relevant to your operations.
• Employee Records: Maintain documentation on employee classification, hiring, performance, and compliance with Michigan labor laws.

Operational Tips for Recordkeeping

• Use Digital Tools: Implement accounting and document management software to automate recordkeeping and reduce errors.
• Follow Retention Schedules: As of 2026, keep financial and tax records for at least seven years to meet IRS and Michigan tax authority guidelines.
• Secure Sensitive Data: Protect employee and customer information with secure storage solutions and access controls.
• Regular Audits: Periodically review your records to ensure completeness and compliance with Michigan state regulations.