Thus, there can never be a challenge that income was omitted from any source. Once this policy has been established, the second step is to make out the deposit ticket that the bank requires so that the bank knows whose funds it is handling to serve as one of your bookkeeping tools. It does no good to list on the deposit slip the number of the bank from which the deposit was received. It is important, however, to show who paid you the money and what it was for. By having this information on the deposit slip, you can reconstruct these records even if they should be lost or destroyed.
Banks maintain photocopies of all deposits and checks for several years.
The length of time they keep these documents varies from a minimum of about three years to a maximum of about five years, but these periods of time are adequate for any tax examination that would come along. Thus, if you lose a deposit slip, a check, or if you cannot tell what the source of an income item was, you can obtain a copy of the microfilm of the deposit from the bank and identify the item since it is spelled out on the deposit slip. The same thing can also be done with expenses and other disbursements if one of the appropriate types of checks is used. This, then becomes part of the body of the check, and, like the deposit slip mentioned, is photocopied by the bank and is recoverable from a microfilm of the canceled checks. During the first year or two of operation, you will have to rely on someone to advise you regarding the individual costs that you incur in a horse operation.