If you’re anything like me, you can’t stand clutter. Mail, papers, physical clutter, digital clutter…when I am in the mood to purge, oh man – it’s all going. Especially at the end of the year when we are preparing for the holidays and spending more time indoors.

But if you ever get a bit carried away (like our friends on The Home Edit)…

…and get that tinge of regret that you tossed something you actually needed…keep reading. 

When it comes to business and financial records, there are things that you DO need to hold onto. But what do you keep? How long do you keep it? 

TAXES

In most cases, you’ll want to keep any documents that support any income, deductions and credits claimed on your tax return for at least THREE years after the tax-filing deadline.

The IRS has up to SIX years to audit you if you’ve neglected to report at least 25% of your income. So if you’re self-employed, and have 1099s reporting business income from a variety of sources, it could be easy to miss reporting some income. Erring on the side of caution, keep any 1099s, receipts, and other records of business expenses for at least SIX years.

Some investments, foreign tax credits, property, and contributions could require you to keep records for up to 10 years, so be sure to get guidance on your specific situation.

Keep in mind, each state has different tax record guidelines so be sure to check their website as well for guidance on this.

Always keep copies of your filed tax returns (pretty much indefinitely). They help in preparing future tax returns and making computations if you need to file an amended return. These can be digital copies scanned onto your computer or actual paper copies.

When in doubt, check the IRS website for their detailed guidelines here.

OTHER RECORDS

We recommend that you always have a few basic pieces of information and paperwork for your business at your fingertips. This includes (but is not limited to):

• Corporate Documents – When you registered for your LLC you should have received acceptance from the state.  If you elect as an S-Corp you will also receive additional paperwork from the IRS noting this.  When you apply for your EIN, you should receive a notice from the IRS/Dept of Treasury. 
• Previous Year’s Returns – Use the guidance above for how long to keep your tax records but at the very least, have the past two years handy and not packed away in a box in the attic. 
• Current Profit & Loss Statement – We always recommend having a current (within the past 3 months) statement at your fingertips (and ideally you download and save one each month). 

Why should you always have these accessible? Just like a physical business typically has a license or placard always on display, your online business should also have this. If you don’t have them or lost them in your last move, don’t panic. You can (usually) always get copies of them. 

Say you’re applying for a loan, or want to buy a house.  A lot of times, these things can happen quickly and you don’t want to miss out on an opportunity because you have to contact the state or IRS for additional copies of your records.

Bottom line, we want to make sure you feel empowered at all times. We’ve unfortunately seen businesses become unresponsive and business owners come to us having to start from scratch because they were unable to get any of their records.   

If you’ve experienced this and need better support for your biz, we’d love to chat.

What about other records for your business? A lot of things like employment & payroll records will be actually dictated by the state your business is registered in OR the states where your employees are located, so be sure to know that information as well. 

Your account, HR or legal team will also be able to advise you if you have a specific tax, payroll, employment or business situation that might require holding onto things for longer than the standard guidelines. 

This is provided as information only and as a starting point for a conversation with your own legal and accounting team, this should not be considered legal or financial advice.

All of these decisions are based on a number of factors and we cannot guarantee that you will experience any specific results based on any information provided. Please speak with your own retained professionals to ensure that you are making the best decisions for your business & personal situation.

Please speak with your own retained professionals to ensure that you are making the best decisions for your business & personal situation.