We’re well past the April 15th filing deadline and you’re taking some time to clean out your files. After running your business for several years, the paperwork really starts to pile up! So how long is long enough to keep your tax documents?
The IRS has three years from the date you filed your taxes (or the due date, whichever is later) to audit your return information. In the case of small business deductions, travel and entertainment expenses top the list of expenses most likely to be audited. For this reason, you should keep your records in a readable, searchable condition for at least three years from the year you filed your return.
Certain financial records, though, should be kept forever. These include any legal documents such as articles of incorporation or organization, trademark and copyright documents, and payroll information.
Here’s some quick guidelines to start with:
Business Records – Keep for One Year
- Deposit slip duplicates
- Purchase Orders
- Correspondence with customers and vendors
Business Records – Keep for Four Years
- Bank statements
- Petty cash vouchers
- Employees’ time cards
- Expired insurance policies
Business Records – Keep for Six Years
- Accounts Receivable and Accounts Payable records
- Cancelled checks
- Employment tax records
- Expired leases
- Invoices you’ve sent to customers
- Payroll records (W-2, W-4, Earnings Records, etc..) for terminated employees
- Sales records
- Travel and Entertainment records
Business Records – Keep Forever
- Articles of Incorporation & bylaws
- Cancelled checks for any tax payments
- Corporate documents & minutes
- Documents and receipts related to fixed assets you’ve purchased
- Depreciation schedules
- Year-end financial statements
- Legal records & correspondence
- Mortgages and note agreements
- Property records
- Stock records
- Tax returns and corresponding worksheets
- Registrations for trademarks, copyrights or patents
- Sales & use tax returns
Ready to start shredding? Check with your insurance company and creditors first, as they may require you to keep some records longer than the IRS does.
ShredCorp has a great online Document Retention Schedule at www.shred-corp.com.
Deb Howard Greenleaf, EA, CEO and Principal, of Greenleaf Accounting Services provides virtual accounting and bookkeeping services and specializes in financial management to consultants, coaches, solo professionals, and other small business owners across the US. Deb is an Enrolled Agent (EA)—an IRS-licensed tax professional—and specializes in small businesses and entrepreneurs filing Schedule C or as an LLC. As an Advanced Certified QuickBooks ProAdvisor, Deb spends her day in QuickBooks Online and specializes in providing QBO support.