How Long to Keep Business Records

Most business owners don’t know how long they should hold on to old records. According to the IRS, here’s how long you should keep those records:

Permanently:

• general ledgers and journals
• payroll records, including W-2s, 940s, 941s
• year-end financial statements
• tax returns and supporting documents
• articles of incorporation, bylaws, meeting minutes, etc.
• retirement plan records
• mortgages and deeds

10 Years:

• bank statements and cancelled checks
• AP & AR documents
• invoices and billing information (customers and ventors)
• leases
• contracts with clients and suppliers

7 years:

• expense reports
• employee agreements/contracts/termination records
• documents related to litigation
• inventory documentation

3 years:

• employment applications
• employee disability and illness benefit records
• expired insurance policies
• general correspondence

This information is helpful but our favorite rule of thumb is to “save everything” and keep anything older than a few years in storage. Unless your business deals with mountains of paperwork, that method will be the easiest way to keep it simple and safe.

Action Plan:

• Organize your documents by the various categories above.
• Scan copies of the critical documents and place them in a free Dropbox account which will keep your files safe and backed-up “in the cloud” (Free up to 2GB of data)
• If you are a Corporation or LLC, then also make sure that you are complying with record-keeping, minutes and annual reports. Click here to learn about our ComplianceLock™ service which can automate these tasks.

This entry was posted on Thursday, August 29th, 2013 at 2:00 am and is filed under Small Biz Management, Starting A Business, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.