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Keep or Trash?

Some tips on how long to keep business documents ...

Save indefinitely
Documents that are relevant to business operations and assets should be stored indefinitely.

  • Partnership documents
  • Contractual agreements, such as vendor relationships, marketing, or commission and royalty structures
  • Property records, including intellectual property, for as long as you own the asset plus three years after year of the tax return that includes its sale
  • Deeds and titles
Depending what type of documents you're dealing with, you need to store some of them for certain periods of time, others you can digitize, and others you can throw away. Let's start with the documents you need to keep physical copies of forever:
 
  • Birth and death certificates
  • Social security cards
  • Pension plan documents
  • ID cards and passports
  • Marriage license
  • Business license
  • Any insurance policy (good to keep even if they have a digital copy in case problems come up)
  • Wills, living wills, and powers of attorney
  • Vehicle titles and loan documents
  • House deeds and mortgage documents
Safe to Shred
Unless it shows proof of a deductible expense, many documents and receipts can be shredded monthly or annually.

 
  • ATM receipts and deposit slips after they’ve been reconciled with your bank statement
  • Monthly and quarterly bank statements if year-end statements are received
Documents Retention
In general, you want to keep physical copies of anything related to state or federal matters, including certifications, licenses, or deeds. The reason is twofold: you want to have easy access to these in case you need them, and they're also a pain to replace because you typically need to make a direct request to the government agency, which takes a lot of time.

There are certain documents you should keep for life - most can be held three years or less.  Here are some quick guidelines on how long to hold the most common business financial documents:

Save for Three Years
Material that supports tax returns should be saved for three years.  These might include:

 
  • Income-related documents, such as invoices, cash register tapes, credit card charge slips, bank deposit slips, 1099s and W2s
  • Proof of deductible purchases and expenses, such as receipts, invoices, cancelled checks, mileage logs, and credit card slips or statements
  • Receipts for charitable contributions
While three years is standard, the IRS can perform an audit up to six years after taxes are filed if a "substantial error" is suspected. In the case of fraud, there is no limitation on an audit. If you are worried about being audited beyond the three-year limit, you should hold your documentation longer.

Save for Six Years

 
  • The IRS recommends keeping filed state and federal tax returns for six years; or indefinitely for "peace of mind"
  • Payroll records

 

 

 

 


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