Government agencies, such as the Internal Revenue Service and state treasury departments, are the most likely entities that could request various past business documents. Keeping all types of business-related records will be valuable if the need arises to substantiate claims, transactions and information filed on tax returns. You never know when old business records may be useful, so it is advisable to keep all business records as long as it is feasible. That said, there are general guidelines as to the length of time for keeping common documents.

Federal record retention guidelines: Who regulates recordkeeping?

So long as your health insurance is active, you should keep these records. If your coverage ended or you’ve moved to another insurance company, go ahead and toss paperwork once you’re sure you won’t need it. The same is true if you receive how long do you need to keep business records disability or unemployment benefits. 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.

• Digital record-keeping offers significant advantages, including reduced physical storage needs, improved searchability, and easier backup capabilities.
• Try keeping a logbook in the glove compartment and jotting down the mileage of each business-related trip.
• That means you’d need to keep the receipts, tax records, and any other documentation related to the return until April 15, 2024—three years after the deadline for your 2020 tax return.
• Typically, you must keep business records for three years and employment tax records for at least four years.
• It’s likely that you booked a hotel online, so the record is digital anyway, but if you happened to pay in cash, make sure to hang on to the document.
• Business document management involves creating structured systems that allow you to quickly locate documents, maintain version control, ensure authorized access, and meet legal requirements.

How Long to Keep Employee Files: A Guide for 2025

For your most important documents, a standard filing cabinet might not be enough. Look for a safe that is fireproof and waterproof for maximum protection. A home safe doesn’t have to be elaborate or expensive, like something you’ve probably seen in the movies (no need for hidden wall safes behind artwork). A simple lockbox you can grab and go is perfect for storing documents in the event of a home fire or flood.

Cash Document Retention Guidelines

State statutes of limitations can vary, so check with a tax professional on the limitations in your state. Your Bench bookkeeping team automates your financial admin, connecting bank accounts, credit cards, and payment processors to import information into our platform. Your team also answers questions and completes your tax prep ahead of filing.

• For example, Massachusetts has a 6-year statute; New Jersey, Ohio and West Virginia have 10-year statutes; Pennsylvania has a 12-year statute.
• 3 years – For assessment of tax you owe, this period is generally 3 years from the date you filed the return.
• A best practice is to create a record retention policy for yourself and/or your business, which details the procedures for proper records management and disposal.
• While old school types may prefer paper, there are many secure cloud storage systems available that keep your data safe and make finding documents as simple as using a search bar.
• Every organization should have a document retention policy and procedures for retaining, storing, and disposing of data.
• You never know when old business records may be useful, so it is advisable to keep all business records as long as it is feasible.

Industry and Location

But you can make a plan for record retention by thinking about the purpose of a document and future situations that might arise. Keeping your business records in a filing system may be last on your list of priorities, but it’s just as important as any other aspect of your business, especially if you’re on a tight budget. Every receipt saved could translate into a deduction on your tax return. Should you decide to close your business, the time limits listed above will remain in effect. Keeping business records doesn’t have to mean you stockpile mounds of paperwork or squirrel away receipts in a disorganized shoebox. In the healthcare industry, patient records need to be kept well preserved, though the period of time for keeping them will vary.

Archivists have a strong working knowledge of records and work to maintain their state’s documents. They also help document their state’s record retention guidelines for both individuals and businesses. While pre-hire documentation focuses on recruitment decisions, active employee records encompass a broader scope of information. Accounting Errors These include everything from an employee’s personnel file to employment verification, performance reviews, and benefits enrollments. Organizations are advised to retain all of these documents while employees work at the company, plus for 3-7 years post-employment.

What are business documents?

3 years – For assessment of tax you owe, this period is generally 3 years from the date you filed the return. Returns filed before the due date are generally treated as filed on the due date. Use standardized business document templates to create your documents whenever possible.

What documents do I need for taxes or audits?

Unlike statutes of limitations, statutes of repose definitively bar claims after a set period of time, regardless of when a defect is discovered or an injury occurs. Most statutes of repose run from the date of substantial or final completion, though some statutes use other trigger dates (including written acceptance or occupancy). Most states (as of this writing, 46) have an applicable statute of repose, which range from four to fifteen years. For example, Massachusetts has a 6-year statute; New Jersey, Ohio and West Virginia have 10-year statutes; Pennsylvania has a 12-year statute. Document everything in a written policy that all team members can reference.

For example, your insurance company or creditors may require you to keep them longer than the IRS does. Retirement account distributions (i.e., withdrawals) go on your tax return. It’s not hard to fill a box with old bank and credit card statements, pay https://www.bookstime.com/ stubs and other number-intense documents from financial institutions.

• While you’re unlikely to have problems in every area, virtually anything can happen to create a liability for your company.
• When you receive a new property tax assessment, it’s probably safe to toss the old one, Crumm said.
• Except in a few cases, the law does not require any special kind of records.
• Getting it wrong can result in significant penalties, leave your organization vulnerable to lawsuits, and create operational inefficiencies that impact your entire HR function.
• Yes, employment tax records should be kept for at least four years after the tax is due or paid, whichever is later.
• Reach out to our team today to discuss document management solutions.

Services

You must keep sales and use tax records for four years unless CDTFA gives written authorization for their earlier destruction. This applies to all records that pertain to transactions involving sales or use tax liability. It’s important to get into the habit of recording your business mileage each time you use your car for business-related travel. Try keeping a logbook in the glove compartment and jotting down the mileage of each business-related trip.