With the start of the new year a little bit more than two weeks away, this is a great time to ensure your financial papers are organized and ready for your accountant. Here is a checklist of what documents to toss, what to keep, and how long to keep them.
Documents You Can Throw Away Within the Year
First things first, if you intend to dispose of any documents that have your personal identifiable information, please consider shredding them. You can throw away ATM slips and bank deposit slips as soon as they are noted on your monthly bank statements.
File Away (or Store Electronically) for 3 -4 Years
- Job Application Records. To ensure you have proof of compliance, hold onto your hiring records for one to three years after the position is filled.
- Your Payroll Tax Records. If you have employees, you should keep all employment tax records for at least four years from the time you paid the taxes or filed the return. These tax records include employee documentation, time sheets, wages, pension payments, and payment records for benefits.
File Away (or Store Electronically) 6 – 7 Years
- Your Business Tax Returns. Hold onto your business tax returns and the supporting documentation until you can no long be audited by the IRS for that tax year. This is typically three (3) years, but Uncle Sam can go back as far as six (6) years if they believe you failed to report income.
- Your Financial Statements. File your canceled checks, cash receipts, paid invoices, bank account statements and credit card statements away and hold onto them for seven (7) years. Once you pay off a loan, hold onto the records seven years after the loan is paid.
- Accounting Records. Hold onto your accounting records, such as profit and loss statements, budgets, balance sheets and audit reports a minimum of seven (7) years.
File Away (or Store Electronically) Indefinitely
- Essential Business Documents. Essential business documentations, such as your tax ID information and articles of incorporation or articles of organization, should be kept as long you have your business.
- Other Business Documentation. Hold onto the following documents until the contract has ended or the term has ended — Annual Reports, Business Permits, and Certification Documentation.
- Business Contracts. Any contracts you have signed with clients, vendors, contractors, employees and business partners. This may be a lot for you, so consider keeping these documents electronically.
- Property and Assets Records. Your deeds, titles and property records should be kept indefinitely. If the business property is real estate or a vehicle, keep the deed or vehicle title in a safe location until you sell or properly dispose the property.
Love and Soul Always, Kawania
Photo: Natarsha Wright Photography