Except in a few cases, the law does not require any special kind of records. You can choose any recordkeeping system suited to your business that clearly shows your income and expenses.
The business you are in affects the type of records you need to keep for federal tax purposes. You should set up your recordkeeping system using an accounting method that clearly shows your income for your tax year. If you are in more than one business, you should keep a complete and separate set of records for each business.
Your recordkeeping system should include a summary of your business transactions. This summary is ordinarily made in your books (for example, accounting journals and ledgers). Your books must show your gross income, as well as your deductions and credits. For most small businesses, the business checkbook is the main source for entries in the business books. In addition, you must keep supporting documents.
Supporting Documents
Recording Business Transactions
Bookkeeping System
Information courtesy of the Internal Revenue Service.
Recordkeeping:
Why Keep Records?
Kinds of Records To Keep
How Long To Keep Records
Sample Record System
