At year-end, your CPA or tax professional can review your documents and completed financial reports side-by-side, making tax filing a breeze. Learn more. Hold up. Before you toss them, double check to see whether anyone else you do business with might need them.
Creditors, business lawyers, and insurance companies all sometimes require you to keep records longer than the IRS does. This is really just another benefit to keeping digital records. Instead of worrying whether you should be keeping or getting rid of them, you can archive them permanently. Or even better, digitize it. We're an online bookkeeping service powered by real humans.
Bench gives you a dedicated bookkeeper supported by a team of knowledgeable small business experts. Your bookkeeping team imports bank statements, categorizes transactions, and prepares financial statements every month. Get started with a free month of bookkeeping. This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post.
Bench assumes no liability for actions taken in reliance upon the information contained herein. Sign up for a trial of Bench. No pressure, no credit card required. For Partners. By Nick Zarzycki on October 20, Discrimination claims.
Requirements for claims about discrimination also vary by state and the type of discrimination age, gender, race, disability, and so on. Department of Labor, also have recordkeeping requirements for discrimination claims. Employee pension and retirement plans.
You might want to permanently keep records for employees who receive pension or retirement plan benefits from your company plan to protect yourself if the employee files a claim many years after retirement.
In addition to pension and retirement plan documents, permanently keep business formation documents, corporate by-laws, annual reports, shareholder meeting minutes, and business licenses and permits to help explain to potential buyers, lenders, and others the actions and decisions you made while running your business.
It can never be assigned to another business, and you should retain it permanently, even if you no longer operate your business. If you have an "occurrence-based" insurance policy, you will want to keep it indefinitely. Occurrence-based policies insure you as long as the policy was in effect on the date that the event giving rise to the claim occurred. Should you discover damages or other losses after you have dropped or changed your policy, your coverage remains in effect.
By contrast, a "claims made" policy will cover you only if the policy is in effect when the claim is filed. You might also have leases for your business premises, insurance policies, and business loan records, among other documents. Leases and insurance policies can be used to help your negotiating position when it comes time to renew, and you will want to keep them until they are replaced. You should retain lease and business loan documents that pertain to tax deductions for the seven-year period described earlier.
Keep records of satisfied loans for seven years also. You needn't keep bank and credit card statements longer than a year, unless they contain entries that you are using for your tax filing. If they do, follow the rules for tax documents discussed earlier. In today's digital age, both paper and electronic records are acceptable forms of documentation. Make sure that records you have scanned into your computer files are legible, however.
The IRS recommends you back up your paper documents electronically in case of flood, fire, or other disaster. Choose a method of electronic storage--whether on your computer, in the cloud, or on a thumb drive or external hard drive—that offers the most safety and security against identity theft. Make sure your computer is password protected, and consider using an encryption program like Microsoft BitLocker, Apple FileVault, or a third-party program.
Choose a well-protected cloud storage program, and use a unique and complex password with two-factor authentication. The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or will be formed by use of the site. The attorney listings on this site are paid attorney advertising.
In some states, the information on this website may be considered a lawyer referral service. These records do not have to be kept permanently, however. Imagine how big the records would be for century-old corporations! The length of time you need to keep a record depends on the document in question.
For example, tax returns usually need to be kept for six years. There is no filing requirement for your corporate records. Corporate law requires you to maintain the records, but you do not need to file them with the IRS or your Secretary of State. Corporate record-keeping can be confusing and difficult, even if you operate a small company. The biggest challenge with record-keeping is simply making sure you have all the documents you need.
If the extensive record-keeping requirements of a corporation sound too daunting, perhaps forming a limited liability company LLC would be a better choice for your business, as this entity type requires far fewer records to be kept.
LegalZoom and ZenBusiness are two common choices for entrepreneurs. We reviewed the top business incorporation services and LLC formation services to see which has the best overall value.
Check out our rankings of the best options. Thank you for your support! If you decide to use our recommended service providers, we earn a small commission.
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