

If your filing cabinet is bursting at the seams, you’re not alone. As a small business owner, you have a lot of paperwork to keep track of – everything from business licenses, employee records, corporate lunch receipts – the list goes on.
Some of the more challenging records to manage are your business’ tax documents and all of the supporting paperwork that comes with them.
As a default, many business owners end up unnecessarily saving every last receipt for years and years. Or, even worse, they become overwhelmed and throw away important information.
The IRS can audit your return for up to seven years after you file if they suspect tax filings were made inaccurately or if you claimed a deduction on a bad debt. The period of limitations – the period of time you have to amend your tax return – expires three years after a return is filed. So, hang onto your tax returns and all supporting documents for at least seven years, if not longer.
For the full breakdown of federal tax documentation requirements based on your unique business needs, go to the IRS website and read through their page on how long to keep tax records.
Tax rules pertaining to financial records seem to change every year. The guide below will help you better understand the latest requirements and break down which documents you should store, which you can shred, and which belong under lock and key.
The following documents are those you’ll want to keep literal tabs on – print, file, and store these six tax documents every year.
Not every business record requires you to maintain a physical paper trail. If you’re like many businesses and prefer to maintain your records and documentation electronically, you can keep these documents on a server or on the cloud.
If you do decide to store these documents electronically, it’s critical to the safety of your business that you protect your information with trusted, proven data security. A recent SCORE Webinar, ‘What Small Businesses Need to Know About Cybersecurity,’ touches on the back-up and recovery of sensitive documents.
Whatever electronic or cloud-based storage option you choose, it’s worth your time to research that platform’s data security and their process for safeguarding your business, as well as recovering your data should there be a security breach? Check out this list of business cloud storage providers to help you determine the safest way for your business to store sensitive information electronically and keep your tax documents and other business records in order.
There are several types of business records that do not need to be physically or electronically stored. In fact, some records containing personal information are many times better shredded than not. This excludes any tax documentation, legal documents, and most of the records listed above.
Always check with your financial advisor and accountant before you begin to shred what may be important documentation for your business to maintain. Typically, though, most businesses can shred non-essential documentation that lists personal information.
If you’re still not sure whether to keep those business records or store them away, even after the period of limitations has expired, hanging onto them for a while longer is never a bad option. And, digitizing your records will make it even easier to store past documents, taking the stress off of your filing cabinet.
Now that you’ve organized your business’ financial records and know which documents to store as physical copies, which ones can be stored electronically, and which ones can be shredded, the next step is to come up with a system for filing and storing the right documentation.
One of the easiest ways to get your business records in order is with the help of a SCORE mentor. A mentor will direct you to the best resources for managing your records and help you create a system to keep your tax documents and other business records in order. Contact a SCORE mentor today.
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Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.