Looking at the Basics: How Long Should You Maintain Your Records for?

A question we often hear from our customers is how long they need to store important documents and information for. The answer varies based on the type of records in question, but the overall consensus is that the longer you maintain your important documents, the more secure you are. Today’s article covers the basic requirements for critical document storage in the business world, but for a personalized answer specific to your business and records, reach out to our team at Happy Faces Records Management for advice.

Financial Records

It is recommended by the IRS that businesses keep supportive financial records relative to income or deductions until the period of limitations expires for a specific tax return. This can be up to 6 years after filing for your tax return, as that is the amount of time within which the IRS can audit you if the filing is greater than 25% f your business’ gross income. In some cases, it is even recommended that you maintain your supportive documents for 7 years if you filed for a deduction for a bad debt or worthless security.

Relative to non-tax specific documents such as journal entries, profit, and loss statements, financial statements, check registers and general business ledgers permanently. Similarly, major business documents, like annual reports, corporate by-laws and amendments, Board of Director information, annual meeting minutes and business formation documents, should also be retained on a permanent basis.

Project Documentation

Important project-generated documents have less specific timelines for retention. Depending on the nature of the project, your relationship with the client, and the possibility of needing access to those records for future client proposals or project, you may want to keep certain records indefinitely. At the very least a digital copy of such material can provide the resources you need to avoid entirely duplicating project material. Certain contracts require businesses to keep project material on file (either in hard copy or in digital form for a certain period of time simply because the client would like to maintain access to the records as well.

Past projects provide helpful learning material and case studies for the training of new employees, conversations around lessons learned, and even provide the basis for marketing material sure to help you land your next customer.  Considering that you never really know when you might need access to such material, it would be a shame to have disposed of key material too early.

Human Resource Documents

For businesses that have employees, it is suggested that you maintain all employment tax records for at least 4 years after the date taxes were due or paid (whichever is later). Employment tax records include information such as the employer identification number, amounts and dates of wages paid, annuity and pension payments and tax deposits, the names, addresses, social security numbers, dates of employment and occupations of employees and records of allocated tips and fringe benefits.

Depending on how much and how long you need to retain your records, it can be a real challenge to archive and manage that content. Don’t just leave it to luck – partner with a true document management expert like Happy Faces Records Management.


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