The general rule is three years depending on the action, expense and event recorded in the document. For a complete list of records and how long to keep them, download our PDF guide here. The following questions should be applied to each record as you decide whether to keep a document or throw it away. Designed for business owners, CO— is a site that connects like minds and delivers actionable insights for next-level growth. However, before making any business decision, you should consult a professional who can advise you based on your individual situation. Entrepreneurs and industry leaders share their best advice on how to take your company to the next level.

What Is Florida’s Transfer Tax (Documentary Stamp Tax)?

They’re not as accessible as digital records, and if something catastrophic happens, such as a fire or flood, your data is still at risk. Ideally, you should keep the originals of your physical files with digital backups securely stored. Document retention guidelines typically require businesses to store records for one, three, or seven years. If you’re unsure what to keep and what to shred, your accountant, lawyer, and state recordkeeping agency may provide guidance. If HMRC investigates your tax affairs, you may need to provide how long to keep business records records beyond the standard retention period.

How long should I keep employment tax records?

• If keeping other documents around longer term makes you anxious, you can opt to scan them to create electronic copies and then dispose of the original paper documents.
• Running a successful business requires diligent financial management, and one key aspect of this is record-keeping.
• The Occupational Safety and Health Administration (OSHA) requires businesses to maintain records related to workplace injuries and illnesses.
• (These time frames are known as “periods of limitations.”) But it’s a good idea to use seven years as your guide for keeping these documents.
• For example, if you sell a building, you must keep all purchase, improvement, and depreciation records for that building for three years after you file the tax return for the year of the sale.
• Review all guidelines carefully and come up with a plan that’s easy to implement and stick with.

Thankfully, you don’t have to keep paper records of your finances and other important data. Digital records serve the same function — and they don’t require a filing system to maintain. For instance, you can use your online bank statements instead of paper copies.

This includes robust backup and retrieval systems to prevent data loss and ensure records can be accessed promptly. Regardless of the storage method, all records must be available for inspection and able to substantiate the information reported on tax returns. Copies of all filed tax returns, including Form 1040, Form 1120, and Form 1065, along with all supporting documents like Forms 1099, K-1s, schedules, and worksheets, should be retained indefinitely.

• When federal and state retention periods differ, businesses follow the longer period to ensure full compliance.
• For Title VII and ADA, the requirements kick in when you have 15 or more employees; it’s 20 or more employees for ADEA.
• Many financial institutions and businesses now let you opt for electronic billing and statements, either through email or online account access.
• However, if a business intentionally and methodically falsifies its business records, it can be prosecuted and potentially lose the right to do business in a particular state.

If you’re a corporation, you’ll also need to keep any director or shareholder meeting minutes and a stock ledger. Other key ownership and business documents should be kept permanently, including deeds, titles, property records, and any contracts. In addition to employee tax information, you should keep all human resources files for any employee, current or former.

These mandates ensure businesses can substantiate reported income, expenses, and deductions. Industry-specific regulations may impose additional or longer retention requirements, reflecting unique demands within particular sectors. Records related to business assets, including purchase, sale, and improvement documentation, should be kept until the period for assessing tax expires for the year in which the asset is disposed of. This ensures that the basis, depreciation, and any gain or loss from the asset’s sale can be accurately determined. Documents supporting general business expenses, such as receipts, invoices, and bank statements, should generally align with the three-year or six-year retention periods, depending on the income reporting.

Your employer identification number (EIN) or tax ID Number is like a social security number. It can never be assigned to another business, and you should retain it permanently, even if you no longer operate your business. Depending on your business and the state where you’re located, you might have many types of HR records that fall under the jurisdiction of different government agencies. If you don’t file a return at all, the IRS can come after your business at any time. Take a demo with BILL to see how our integrated platform can provide your business with seamless AP, AR, and spend and expense management.

They’re a documented history of your company’s activities including financial statements, legal contracts, customer data, inventory logs, and human resources files. Understand the essential timelines for maintaining your business records to ensure compliance, financial accuracy, and operational efficiency. Even if they serve no specific tax purpose, you should keep your bank statements for three to seven years. This allows you to maintain historical records of your company’s finances, which can help make future projections or validate your income. You’re legally allowed to write off the value of these invoices as “bad debt” on your tax return.

Here’s a quick overview of handling these sorts of miscellaneous business records. In most cases, keep business records related to your income tax returns for three years. Missing documentation can cause substantial liability and missed opportunities. Keeping tax returns and other records for the appropriate period allows your business to respond to information requests, including tax audits. Records related to the Family and Medical Leave Act (FMLA), including leave requests and medical certifications, must be retained for at least three years. FMLA medical certifications and related medical histories should be stored in separate, confidential files from general personnel records.

Many banks and credit card issuers offer electronic statements now, so you may not need to keep paper copies on hand, which will cut down on excess clutter. If keeping other documents around longer term makes you anxious, you can opt to scan them to create electronic copies and then dispose of the original paper documents. When it comes to taxes, it’s best to keep any tax records for at least seven years. However, there are circumstances where they can go back as far as six or seven years, for example, if you underreported income by 25% or more.

As a business owner, you likely have various documents in storage, such as tax returns, personnel records, and bank statements. Unfortunately, no single, steadfast retention rule applies to all kinds of records, meaning you need to categorize your files and create a document retention policy (DRP). Specific types of business records often have their own recommended retention periods, which can extend beyond the general guidelines. Records pertaining to payroll and employment taxes, such as Forms 941, W-2s, and W-4s, should be retained for at least four years after the date the tax becomes due or is paid, whichever is later. This duration is crucial for verifying wage information, tax deposits, and employee details.