I understand being thrust into a position of responsibility. My business grew in leaps and bounds, leaving me with boxes and boxes of paperwork that I didn’t know what to do with. Businesses are required to hold on to everything forever, right? I asked myself.
The good news is that no, we’re not — but there are certain requirements.
- Employee earnings: You should maintain employee earnings records for a minimum of four years. (Be sure not to throw away anything relating to unclaimed property, like an unclaimed paycheck).
- Employee time cards: If your business is subject to the Fair Labor Standards Act (engaged in interstate commerce), keep the cards for at least three years in case questions arise.
- Personnel records: Hold on to these for three years after an employee has left.
- Employment tax records: Employment tax records should be kept for four years after the date the tax was due, or the date it was paid, whichever is longer.
- Employee business expenses: Keep mileage logs and other receipts for three years.
- Sales tax returns: State regulations vary. New York requires sales tax records to be retained for three years, while California requires four.
- Business property: Records used to substantiate the cost and deductions (such as depreciation, amortization and depletion) associated with business property must be maintained to determine the basis and gain (or loss) on the sale. Keep these for as long as you own the asset, plus seven years, according to IRS guidelines.
Once you have your records organized, you can develop a system to keep them that way — and then you’ll be truly doing the business version of “adulting.” And, like all my advice, it will save money in the long run!