As your small business starts to take off and expand, you’ll fill out hundreds of files and sign countless documents along the way. Naturally, you may be wondering where to keep all these files, and if you need to hold onto them. To declutter your file cabinets, use the following guide to figure out how long you should keep those tax returns, bank statements, and other records.
A Guide to Business Record-Keeping
Tax Return Documents
After you’ve done all the necessary calculations and gathered all crucial documents, it’s essential to make a copy of your annual income tax return and file it away. This way, you can reference the information next year, or if the IRS asks you to make any changes.
If you don’t file a return or file a fraudulent tax return, you should keep these records indefinitely. If you failed to report more than 25% of your gross income for the year, you should keep the records for at least six years, as the IRS has that much time to seek an amendment. In all other cases, you can reasonably keep your business tax documents for three years. If your small business has employees, you should keep your employment tax records for at least four years.
Human Resource Records
As long as the employee is still working for your business, you should hold onto their human resource files. If they leave or are laid off, you should hold onto these documents for another seven years. For records that pertain to accidents or worker’s compensation claims, you’ll need to keep them on file for seven years after the resolution. Discrimination case files should be kept for four years after the case is closed.
To fund your company, you’ll continuously be money in and out of your business accounts. You may also have some credit cards to help with unexpected expenses. To be safe, hold onto your annual statements for seven years—monthly reports can be cleaned out after a year.
For more help organizing essential business files, turn to Sharrard, McGee & Co., PA. They have locations in Greensboro and High Point, NC, so that you can find help close to home. Whether you need help preparing your tax return or managing general accounting needs, this locally owned business with use their skills to make your life easier, learn more about their capabilities by visiting the website, or call (336) 884-0410 today.