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With tax day looming, everyone worries what papers are critical to keep and for how long. Do I really need that credit card receipt from five years ago? Can I throw away this year’s bank statements? Where’s my W2? If you’re a business owner, those worries magnify.

Here’s some guidance on what tax papers to keep, what to store digitally and what to shred:

What are the top six types of tax/financial documents a business owner should hold on to and for how long?

  1. Form 1040 and supporting documentation for business. Keep for 6 years. A scanned copy is sufficient.
     
  2. Small Business that is S-Corp or Partnership, Schedule K-1 to show your share. Keep for 6 years. A scanned copy is sufficient.
     
  3. Employee Records, Payroll Reports. Keep for 6 years. A scanned copy is sufficient.
     
  4. Partnership/LLC Agreement and any amendments. Keep a hard copy for the life of partnership.
     
  5. S-Corp acceptance letter and Form 2553. Keep for the life of the S-Corp. A scanned copy is sufficient.
     
  6. Any state local licenses required to operate your businesses. Keep hard copies. 

What three documents does it make sense to hold onto electronically even if a business owner doesn’t have to keep hard copies?

  1. Bank statements
     
  2. Legal agreements
     
  3. Copies of your federal and state tax filings

Which items should a business owner shred?

  1. Transaction statements that include sensitive data
     
  2. Other documents that contain personal data

Which items should a business owner keep under lock and key?

Titles, deeds and your will should be kept under lock and key because these documents are valuable and hard to replace.

Important Papers: Which Ones Should I Keep?