As 2013 ends and 2014 begins you will want to organize your business files and prepare for the change in tax years. Get ready to shift your records from active to storage. Clear your storage files for any records not needed. It is advisable to shred the documents that are past the retention record recommendation period.
Basic rules for document retention are:
Income Tax Returns: It is advisable to retain income tax returns and all supporting documents for at least 7 years.
Employment Tax Records: Retain all employment tax records and all supporting documents for at least 4 years.
Asset Records: All asset records should be kept until the year you dispose of the asset. The asset documentation then becomes a supporting document for the tax return for the period of time when the asset is disposed.
Employee Records: Employee documents should be retained for a minimum of 7 years after an employee has been terminated. If there are any worker’s compensation claims or legal disputes, the files should be retained at least 4 years after the claim or dispute was settled final.
Financial Records: Cancelled checks, financial statements, bank statements, credit card statements and general ledgers should be retained for 7 years.
Develop your Document Management system and take charge of your records. Happy Filing!