Every business owner knows how important it is to keep business records safe. All documents related to business activities have to be kept to avoid litigation and tax problems in future. However keeping these records is not an easy task and can be tiresome to keep track of, which is why all business owners can’t wait to get rid of their records. The problem however is that they don’t know how long they are required to keep these records.
The IRS has a set of records keeping rules for tax documents, there is however very little guidance on other business documents. Bookkeepers, accountants, accounts receivable solutions providers, payroll processing companies and the rest however recommend that you keep your records for at least 7 years to be safe. You never know when and why you will need the documents. Let us look at some specific documents and how long you will be required to keep them.
Business and Payroll Tax Returns– All your business tax returns related documents need to be maintained for at least 3 years, i.e. until the Internal Revenue Service can no longer audit your return. All your payroll tax related documents have to be retained for up to 4 years from the date you paid them.
Bookkeeping and Accounting Records– All accounts receivable solutions providers, bookkeepers and accountants feel that it is wise to keep your accounts and books safe for as long as possible, the minimum period being 7 years. This includes your profit and loss reports, budgets, receipts, reconciliation statements, bank account and credit card statements.
Employee Records– 7 years from the data of termination or resignation is the minimum period to keep employee records. This can go up to 10 years in the event of a work related accident or claim against the company.
Be wise and choose well. If you have even the slightest hesitation, don’t do it, because once gone, you won’t get the records back. Business records have to be handled with the utmost care.