Plain and Simple: Bright Business Insights Winter 2019 | Page 4

HOLD ON TO THOSE DOCUMENTS! Record Retention Considerations for Business Owners You’ve been running your business for many years, which means – more than likely – you’ve been holding on to a lot of records and tax Keep At Least Seven Years • Accident reports and claims (settled cases) that these papers have been piling up around your office. You might • Employee payroll records (W-2, W-4, annual earnings, etc.) even be inclined to send most of the documents straight to the shredder. • Withholding tax statements • Accounts payable/receivable ledgers and schedules • Expense analyses • Inventories of products, materials and supplies • Telephone logs/message books documents as well. By doing this, you’ve probably started to notice Stop right there. The IRS has regulations in place to help govern how long you are required to retain your business’s records. So, before you permanently dispose of your documents, double-check the current record retention schedule to make sure you are in the clear. Keep any documents that include your income, deduction or credit claims for tax return purposes. Retain these records until the period of limitations for a tax return expires. The period of limitations is Keep At Least Three Years • Bank deposit slips to your tax return to claim a credit or refund. That being said, even • Employment records though you may not plan to make changes to your tax return, the IRS • Internal work orders • Production and sales reports • Sales commission reports the period of time where you are still permitted to make changes might, which is why it’s smart to retain your documents until the IRS no longer has the authority to set additional taxes or request more information from you. Record Retention Important Considerations Your word may be rock solid. However, the IRS doesn’t know that, As your business grows, so will the amount of important documents which is why they need you to keep certain documents that can be used you’ll be required to keep. Unfortunately, this can also make you to reinforce your reporting on your tax return. Read on to discover more vulnerable to risks related to document retention compliance how long you are required to hold on to some of your most important issues. Remember, the amount of time you must retain a record is documents. entirely dependent on its type. Also, consider how you’re going to Keep Permanently • Copyright registration • Deeds, mortgages and bills of sale • Depreciation schedules • Financial statements • General and private ledgers • Insurance records • Retirement and pension records • Tax returns and worksheets • Documents relating to determination of income tax, sales tax store your retained documents. Electronic storage methods continue to gain popularity over physical storage because they’re inexpensive and easily accessible. Regardless of what storage method you choose, keeping your documents secure is critical. The actual amount of time you are required to keep a specific document may be longer depending on your business or what is contained in the document. If you have questions about certain documents or would like advice on your current record retention practices, give me a call. or payroll tax liability by: Brian Kempf, CPA Principal 212 North Washington Street Millersburg, OH 44654 330.521.4549 [email protected]