Record Retention: Keep It or Toss It?

As we dive into gathering documents for this year’s tax prep, now is the perfect time to re-organize your business and/or personal files. Below are some ‘general’ record retention guidelines to help you sort through your piles of papers. The IRS requires every taxpayer to keep adequate records and make them available upon request. If you fail to keep adequate records, the IRS may disallow deductions and access a penalty so sort wisely!

While purging, keep in mind identifying information can often be found on those accounting and legal documents you will want to discard, such as name, birth date, address and social security numbers. Any confidential or personal items you plan to toss should be SHREDDED to safeguard your privacy and identity.

Organization is Key

First, take a records inventory and place items in broad categories (for example: operations, accounting, tax, and legal). Then each year moving forward you can apply documents in the categories consistently. By taking the time now to index and archive documents, you won’t need to guess which of the 10 boxes has the one document you are looking  for in the future. Especially because we all know it will be in the last box you look! Again, make sure to SHRED all documents that exceed your retention policy.

The following general guidelines can help you develop your own retention timeline policy.

For Your Business

Keep indefinitely:

Keep seven years:

Keep three years:

For Yourself

Keep indefinitely:

Keep ten years:

Keep seven years:

Other Items

If you need additional help deciding which records to keep and which to toss, give us a call at (630) 953- 4900.

<< Back to all blogs

Make Business Plans Realistic and Useful

10 Financial Metrics Small Business Owners Should Know

C or S Corporation: Review with Tax Changes in Mind