Business FinancesQuestion 1169 of 1605
For how long should a contractor generally retain business and tax records to support filed returns and defend against audits?
a.At least several years (commonly cited as a minimum of 3-4 years or longer)
b.6 months
c.30 days
d.Records need not be kept at all
Explanation
Tax authorities generally can audit returns for several years, and contract/lien issues can arise for years after a job. Contractors should keep contracts, invoices, payroll, and tax records for at least three to four years (longer for employment and some tax records) to support their filings and defend disputes.
Law Reference: Business & Professions Code §7111 / IRS guidancePractice all 1605 questions free — no signup required.
Related questions on this topic
- A $50,000 piece of equipment has an estimated salvage value of $5,000 and a useful life of 9 years. What is the annual straight-line depreciation?
- Which of the following would typically be DEPRECIATED rather than expensed in the year purchased?
- Under a Section 179 election, a small contractor may be able to:
- Accurate job-cost records are important primarily because they:
- Which record-keeping method records revenue when it is EARNED and expenses when they are INCURRED, regardless of when cash changes hands?
- Under cash-basis accounting, a contractor records income when:
Last reviewed: · editorial process
Sen Lin, PrepPass Founder · Verified against California CSLB Contractor License Law & Business Exam · How we review
Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)