How Long to Keep Tax Records and Other Documents

If your coverage ended or you’ve moved to another insurance company, go ahead and toss paperwork once you’re sure you won’t need it. The same is true if you receive disability or unemployment benefits. Your best bet is to hang on to your tax returns as long as possible.

• Log into your owner’s portal for more free articles and advice that can help you with every step of the business closure process.
• Hang onto your company formation documents like articles of incorporation or articles of organization.
• If you’re like many of us, the amount of paper that enters your home is hard to handle at times.
• These include your company formation documents, such as articles of incorporation (for corporations) and articles of organization (for LLCs).

These documents contain information you need to record in your books. If you destroy paper or electronic records without the CRA’s permission, you may be prosecuted. For more information on electronic record keeping, see Information Circular IC05-1, Electronic Record Keeping, and GST/HST Memorandum 15.2, Computerized Records. OSHA requires employers to securely store records of accidents for five years. Workplace exposure to hazardous substances must be retained for 30 years because of potential long-term health effects. Under antidiscrimination and wage and hour laws, all documents concerning an employee’s resignation or termination should be kept for one year after separation from employment.

How to start keeping records

Clearing your home of piles of old, useless paperwork is a wonderful feeling, but don’t scrap it with your weekly garbage collection. Most of these documents contain personal information you don’t want to have exposed. If you do end up choosing a digital storage solution, make sure you don’t need a physical copy or original document in the future. The last thing you want to do is shred something to save space, only to need it five years later. If you go the digital route, it may be a good idea to create multiple backup copies in case one of them is damaged or fails. Digital backups take up much less space than having multiple paper copies of your important documents.

• Let’s review some of the business records that the IRS may request, how long to keep each one, and why these records are so important.
• Many employers are surprised to learn that they must keep records of job applicants as well as hires in case of a discrimination complaint.
• This documentation can protect you in case of complaints regarding promotions and compensation.
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• If you do end up going the paperless route, remember to keep a backup copy of your documents in a secure second location, like a password-protected hard drive, or a secondary cloud storage service.
• Many companies keep past bills and invoices available online for the past few months or longer.
• Records may include deeds, titles, or documents showing an asset’s purchase date and price, use, and sales date and price.

The IRS requires you to keep records that support the income you received and the deductions that you take. So if you claim a deduction for a training course or a client lunch, the IRS wants you to keep the details of that — you may be asked about them at a later date. You might also have leases for your business premises, insurance policies, and business loan records, among other documents.

For more business strategies

One part of being a business owner means keeping records for everything, including what you’ve earned, what you’ve spent and where you’ve traveled. It can become easy to get swamped in paperwork, and you may be tempted to toss your records once your business taxes are filed. The time allotted for you to amend your taxes to claim a deduction or request a return is called the period of limitations, how long to keep business records and it generally lasts three years from the date of tax filing. During this time, the IRS can also request information to assess additional tax or examine any fraudulent activity. If you filed your taxes early for a particular year, the three-year clock starts on the tax due date. Proper HR document management is also important to protect your employees’ sensitive information.