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Start » StrategyDo you understand business record retention guidelines? Here’s what you need to know.
As a business owner, you likely have in storage various documents, such as tax returns, personnel records and bank statements. Unfortunately, there isn’t a steadfast retention rule that applies to all kinds of records, meaning you need to categorize your files and create a document retention policy (DRP). Once you know what types of records you have, it’s time to figure out how long to keep tax returns, statements and other documents. Below, we’ll go over legal retention requirements and best practices for records not covered by federal or state laws. Federal record retention guidelines: Who regulates record keeping?Several federal agencies have document retention requirements. The guidelines may vary depending on your industry and circumstances. It’s essential to understand which categories apply to your company to know what documents to keep. In general, the following laws, acts and agencies require record retention:
Your state and local government may have stricter guidelines. Some external agencies, such as the Payment Card Industry Security Standards Council (PCI SSC), require businesses to keep documents for PCI compliance. How long should I keep business documents?Document retention guidelines typically require businesses to store records for one, three or seven years. In some cases, you will need to keep the records forever. If you’re unsure what to keep and what to shred, your accountant, lawyer and state record-keeping agency may provide guidance. Several federal agencies have document retention requirements. The guidelines may vary depending on your industry and circumstances. Use the following information to guide your document retention policy:
[Read more: A Quick Guide to Data Management, Protection and Storage] What are document retention best practices?After you’ve reviewed federal rules and your state’s document retention schedules, you may still have records that you’re unsure about. In this case, the Uniform Preservation of Private Business Records Act (UPPBRA) is a good guideline. Some states, including Texas, Illinois and North Dakota, have adopted this standard. It says businesses should keep records not covered under statute-specific retention periods for at least three years. Next steps: create a document retention policyOrganizing your physical and cloud-based storage along with developing a DRP is the best way to ensure your organization complies with record-keeping standards. Review all guidelines carefully and come up with a plan that’s easy to implement and stick with. CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation. Follow us on Instagram for more expert tips & business owners’ stories. To stay on top of all the news impacting your small business, go here for all of our latest small business news and updates. CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here. Subscribe to our newsletter, Midnight OilExpert business advice, news, and trends, delivered weekly By signing up you agree to the CO— Privacy Policy. You can opt out anytime. Published October 07, 2021 What records need to be kept for 7 years?Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction. Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return. Keep records indefinitely if you do not file a return.
What records must be kept for 10 years?You must be able to produce receipts, invoices, canceled checks or bank records that support all expense items. You should also keep sales slips, invoices or bank records to support all income items. These records should be retained for at least 10 years after they have expired.
How long should you keep banking documents?Most bank statements should be kept accessible in hard copy or electronic form for one year, after which they can be shredded. Anything tax-related such as proof of charitable donations should be kept for at least three years.
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