Business records need to be kept for possible review by corporate board members, company accountants, the Internal Revenue Service and in a rare instance, banks and courts. Storing financial information requires organisation and lots of physical space. Therefore, no business wants to keep financial records longer than necessary. That said, it is prudent to keep all records that could be needed to substantiate claims, transactions and tax filings.
At Least Three Years
Monthly and quarterly corporate financial statements should be kept for at least three years.
At Least Six Years
Files showing sales, such as cash register tapes, purchase orders from customers and invoices, should be kept for six years. Payments made to pay taxes, FICA, income tax withholding for employees, workers’ compensation and other personnel-related payments should be safely stored. Also, save bank records of transactions, maintaining checks written and deposits made.
All records concerning employees should be kept indefinitely, including pension records. Should a past employee file for unemployment benefits, apply for a new job, or have questions dating back to his time of employment, these records must be accessible.
All corporate-related documents should be kept indefinitely, even if the corporation is no longer in business. These documents include the certificate of incorporation, board of director meeting minutes, labour contracts, stock transactions, patents, trademarks and any court case documents. Records of corporation assets and accounts receivable and payable should be kept indefinitely.
The IRS requires records proving income and deductions be kept until the statute of limitations is reached, which is three years from the filing date. However, Jude Coard, a tax partner at the accounting firm Berdon L.L.P., recommends retaining copies of tax returns and payments made to pay taxes indefinitely.