Owning a small business comes with a lot of responsibilities. Among those is getting in the habit of keeping good records both electronically and physically. It’s required that you keep a hard copy of all important documents and files but for how long is the question.
The length of time depends on the action expense or the event the document verifies. We typically tell our clients to hold onto files for eight years. Here are some general rules to follow for good record-keeping practices at your business from the IRS. Contact Lindemeyer for more guidance on this topic by scheduling a first consultation.
- Keep a good record of your business assets
Keep a complete and detailed record of such assets showing when you acquired them how much you paid for them and how the assets are used in your business. This record will allow you to depreciate your assets properly and report the correct gain or loss when you dispose of them.
- How long to keep employment tax records
You must keep all records of employment taxes for at least four years after the date the tax becomes due or is paid whichever is later.
- Records that are connected to assets
Keep records relating to property until the period of limitations expires for the year in which you dispose of the property in a taxable disposition. You must keep these records to figure any depreciation amortization or depletion deduction and to figure the gain or loss when you sell or otherwise dispose of the property.