Most business owners don’t know how long they should hold on to old records. According to the IRS, here’s how long you should keep those records:

Permanently:

• general ledgers and journals
• payroll records, including W-2s, 940s, 941s
• year-end financial statements
• tax returns and supporting documents
• articles of incorporation, bylaws, meeting minutes, etc.
• retirement plan records
• mortgages and deeds

10 Years:

• bank statements and cancelled checks
• AP & AR documents
• invoices and billing information (customers and ventors)
• leases
• contracts with clients and suppliers

7 years:

• expense reports
• employee agreements/contracts/termination records
• documents related to litigation
• inventory documentation

3 years:

• employment applications
• employee disability and illness benefit records
• expired insurance policies
• general correspondence

This information is helpful but our favorite rule of thumb is to “save everything” and keep anything older than a few years in storage. Unless your business deals with mountains of paperwork, that method will be the easiest way to keep it simple and safe.

This entry was posted on Monday, May 7th, 2007 at 4:42 pm and is filed under Starting A Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.