We are often asked “How long do you need to keep tax files as a business?” With most businesses, files pile up fast and storage may run low. As an experienced San Diego business and tax attorney we’ve developed a guide to legal files that you should hold onto, as well as an incremental timeline for most physical or digital records.
Documents to Keep Forever
Some documents should never be thrown away or deleted. These include the following:
- Patents
- Articles of Incorporation
- Licenses and permits
- Copyrights and trademarks
- Capital stock and bond registers
- Tax returns
- Deeds
- Mortgages
- Property records
Documents to Save for at Least Seven Years
The following documents are definitely important, but you don’t need to keep tax files for the rest of your life. For seven years, save documents and files relating to the following:
- Sales tax returns
- Purchase orders
- Invoices to customers/from vendors
- Personal property tax returns
- Accident reports/claims (that are settled)
- Logs for automobiles
- Cash books
- Bills of lading
- Inventory reports
- Employee personnel records post-termination
- Employment tax reports
- General journals
- Payroll records
Documents to Store for at Least Three Years
Some business records aren’t as important as those that are kept permanently or those kept for seven years, but they still might be needed for reference or to defend an audit. A number of these documents are bank-related, while others have to do with inventory and more. The documents to save for roughly three years include the following:
- Logs of any physical inventory
- Vouchers relating to petty cash
- Bank reconciliations
- Expired policies for insurance
- Correspondence in general
- Duplicate deposit slips from the bank
- Working papers or internal audit reports
What to Hold Onto for Just One Year
You may be glad to discover that your only need to keep tax files with certain documents for one year. Some of these include the following:
- Stockroom withdrawal forms
- Notebooks that stenographers have used
- Any purchase orders (excluding those that are part of purchasing department copy)
- Personnel employment applications
Most of these items aren’t required for tax purposes, so even if you were to be audited, the IRS would not need them for any reason. You can probably go ahead and toss these items or delete them from online systems without fear.
Are you still confused about how long to keep tax files and certain documents? When in doubt you need the advice and counsel of an attorney with comprehensive business, accounting, tax and IRS audit experience. We invite you to learn more about the integrated tax, legal, accounting and business consulting services of Allen Barron and contact us or call today to schedule a free consultation at 866-631-3470.
