Strive Tax & Accounting, LLC | Business Document Retention |Green Bay

Continually striving for accuracy, excellence and the highest level of integrity.

Strive Tax & Accounting, LLC

PO Box 28353

Green Bay, WI 54324

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American Institute of Certified Public Accountants
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Website Designed by Strive Tax & Accounting, LLC

CPA's specializing in small business tax and accounting with emphasis in construction and manufacturing for corporation and passthrough entities.

Document Retention Guide

for businesses

Storing business tax records:

How long is long enough?

   

Federal law requires you to maintain copies of your tax returns and supporting documents for three years. This is called the "three-year law" and leads many people to believe they're safe provided they retain their documents for this period of time.

However, if the IRS believes you have significantly under-reported your income (by 25 percent or more), it may go back six years in an audit.  In addition, the statute of limitations in some states exceeds the federal statute, or the states have laws or regulations that require taxpayers to maintain records beyond the state’s statute of limitations, often to verify carryovers, etc. Tailor your years of retention to the longer of the federal or state requirements.

In deciding your own record retention schedule, consider indefinitely keeping those records that cannot be recreated by any other office, institution or governmental unit. Also, keep in mind your own financial concerns that may affect the length of time you keep your records. Most importantly, consult with your attorney for approval of any record retention policy.

Keep For One Year

  • Correspondence with Customers and Vendors

  • Duplicate Deposit Slips

  • Purchase Orders (other than Purchasing Department copy)

  • Receiving Sheets

  • Requisitions

  • Stenographer's Notebooks

  • Stockroom Withdrawal Forms

Keep For Three Years

  • Employee Personnel Records (after termination)

  • Employment Applications

  • Expired Insurance Policies

  • General Correspondence

  • Internal Audit Reports

  • Internal Reports

  • Petty Cash Vouchers

  • Physical Inventory Tags

  • Savings Bond Registration Records of Employees

  • Time Cards For Hourly Employees

Keep For Six Years

  • Accident Reports, Claims

  • Accounts Payable Ledgers and Schedules

  • Accounts Receivable Ledgers and Schedules

  • Bank Statements and Reconciliations

  • Cancelled Checks

  • Cancelled Stock and Bond Certificates

  • Employment Tax Records

  • Expense Analysis and Expense Distribution Schedules

  • Expired Contracts, Leases

  • Expired Option Records

  • Inventories of Products, Materials, Supplies

  • Invoices to Customers

  • Notes Receivable Ledgers, Schedules

  • Payroll Records and Summaries, including payment to pensioners

  • Plant Cost Ledgers

  • Purchasing Department Copies of Purchase Orders

  • Sales Records

  • Subsidiary Ledgers

  • Time Books

  • Travel and Entertainment Records

  • Vouchers for Payments to Vendors, Employees, etc.

  • Voucher Register, Schedules

Keep Forever

While federal guidelines do not require you to keep tax records "forever," in many cases there will be other reasons you'll want to retain these documents indefinitely.

  • Audit Reports from CPAs/Accountants

  • Cancelled Checks for Important Payments (especially tax payments)

  • Cash Books, Charts of Accounts

  • Contracts, Leases Currently in Effect

  • Corporate Documents (incorporation, charter, by-laws, etc.)

  • Documents substantiating fixed asset additions

  • Deeds

  • Depreciation Schedules

  • Financial Statements (Year End)

  • General and Private Ledgers, Year End Trial Balances

  • Insurance Records, Current Accident Reports, Claims, Policies

  • Investment Trade Confirmations

  • IRS Revenue Agent Reports

  • Journals

  • Legal Records, Correspondence and Other Important Matters

  • Minutes Books of Directors and Stockholders

  • Mortgages, Bills of Sale

  • Property Appraisals by Outside Appraisers

  • Property Records

  • Retirement and Pension Records

  • Tax Returns and Worksheets

  • Trademark and Patent Registrations

What is the best way to store your documents?

The best way to store hard copies of tax documents is in a fire-proof safe. Along with your tax records you can keep other important documents like the deed to your house, mortgage and insurance information, your Will or Trust documents, and passwords to bank and brokerage accounts. It’s also a good idea to tell one other person where you keep the key to the safe (e.g., a spouse or other trusted family member). This way, if an emergency arises, that individual will know how to access any documents they may need to keep your affairs in order.

Finally, if you plan on keeping your records for a long time but also don’t want your home to look like an episode of “Hoarders”, consider scanning your documents and keeping a backup of the files on a cloud service. The IRS accepts digital copies of documents as long as they are legible. This method takes up far less space and is easier to organize than a stack of papers.

When it's time to get rid of your documents

​Before getting too excited and throwing your old returns away, check to make sure you do not need to keep it for other purposes. For instance, certain creditors and even some insurance companies may require you to keep records longer than the IRS does. If you do decide to get rid of tax documents, make sure to shred them. Tax returns contain sensitive information that identity thieves love.