Needs to review the security of your connection before proceeding. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team. Compensation may impact the order of which offers appear on page, but our editorial opinions and ratings are not influenced by compensation. Hearst Newspapers participates in various affiliate marketing programs, which means we may get paid commissions on editorially chosen products purchased through our links to retailer sites. Be sure to check with your state and local tax bodies to make sure you understand all related rules or regulations. If you have employees, keep 1099 or W-2 forms for four years.

The IRS also says that it can come after your business for failing to report income for up to 6 years after filing and for up to 7 years if you took a deduction on a bad debt. That’s why most accountants recommend that you hold on to your tax return and all supporting documentation for seven years from filing. You can read more about the IRS’ document requirements here. Keeping business documents such as pay stubs, tax records, and other supporting documents is important. Business owners need to hold on to these documents for a specific period of time.

Recordkeeping After Closing Your Business

Owners might also claim deductions for the depreciation of property or equipment, or they might amortize costs like franchise fees. Keep deeds for property and titles to vehicles among these records. It’s recommended that you hang on to your accounting records for seven years. Some accountants suggest keeping things like financial statements, profit and loss statements, and audit reports indefinitely. Likely, your accounting software allows you to run these reports at any time, so there may be no need to create paper files for them. Many CPA firms and other tax practitioners retain tax records for seven years, though some keep them indefinitely in digital storage. Even businesses that entrust their records to a certified tax professional need to keep copies.

Four years after you file your tax return or your pay your taxes, whichever comes first. As an employer, protect your employer identification number and related documents. Seven years if you deducted the cost of bad debt or worthless securities on your tax return. One of the benefits of keeping electronic records is that you don’t have how long to keep business records to store piles of receipts in a filing cabinet. Archive your old records so that you can access them years into the future, anytime you need. When you start your business, you should set up a business checking account. For most businesses, this is going to be the primary source for information related to your income and expenses.

Specific Documents

The name of your company may be your most important business asset—it tells people who you are and what you do. By having your insurance coverage on hand, you may reduce your out-of-pocket liability in the settlement of any claim. Reconciled is an award-winning organization and one of the fastest-growing accounting firms in the country. When facing inquiries from the Department of Labor, the Social Security Administration, the Equal Opportunity Commission, or U.S.

• Several federal agencies have document retention requirements.
• This includes things like your articles of organization, articles of incorporation, business permits, operating agreements and signed contracts.
• Rosemary Carlson is a finance instructor, author, and consultant who has written about business and personal finance for The Balance since 2008.
• You never know when the Internal Revenue Service might come.
• You should also note that if you need to amend your tax return, there is a time limit on that as well.
• Owners might also claim deductions for the depreciation of property or equipment, or they might amortize costs like franchise fees.

If you decide to sell your business, potential buyers will want to review historical records as part of their due diligence. Do yourself a favor and keep a record of the following documents throughout the year. According to the Internal Revenue Tax Code, you must keep your records as long as they may be needed for the administration of any part of the tax code. https://www.bookstime.com/ As you will see under authority, most decisions for retention of documents are left up to the managers. The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters. We live in a time where data breaches and natural disasters are rampant. Take time to back up and secure your records to avoid catastrophe.