How Long Do I Need to Keep Business Records?

The need for effective document destruction services is a foregone conclusion for modern businesses. We all dream of a paperless office, but the truth is you probably generate reams of paperwork every day and a lot of it includes sensitive information that in the wrong hands could do irreparable damage to your business. Even if you did have a paperless world, what about all the electronic files you create which have the same kind of private information?

The question for a lot of people is, how long do you need to hold on to these private records before bringing a professional information management company into the picture? Let’s look at how long you need to keep business records before calling in a Chicago document shredding company in to remove them for good.

Compliance with Federal and State Law

There are laws in place designating how long businesses need to keep confidential records. These vary widely based on the kind of records you’re storing and how the records pertain to your business. You need to consider both paper records and electronic files when thinking about your information strategy.

Business Tax Records

When it comes to tax records, you should keep any business tax records, as well as any IRS correspondence related to your taxes, indefinitely. This will help you as you prepare future tax returns or if you need to communicate with the government later on. At the very least, the IRS recommends that you hold onto supporting tax records for 7 years.

Employment Records and HR Files

When it comes to your employment taxes, you should hang onto employment tax records for four years after the date of payment of taxes (or after they were due, whichever comes later). This includes things like your EIN, wage amounts and dates, annuities and pension payments, tax deposits, and the personal information of employees including SSN, dates of employment, fringe benefits, allocated tips, etc.

General employment records should be kept for at least 7 years after an employee leaves the company, and records of any applicants who weren’t hired should be kept on hand for up to 3 years. Records surrounding employees who have suffered accidents should be kept for up to ten years following payment of workers’ comp benefits.

Business Assets

If you’ve got business assets, it’s recommended that you keep records of those assets throughout the period of limitations following the disposal of said assets. This will enable you to calculate any depletion, amortization or depreciation you need for tax purposes.

Ledgers and Financial Documents

For these, it’s highly recommended that you keep such information for at least 7 years, but largely this is a recommended precaution, as accountants tend to be fairly conservative. These documents can include things like meeting minutes, by-laws, the board of director’s information, and the like. It also includes such things as bank and credit statements and canceled checks.

What to Do Next?

After your period of keeping information expires, hire an experienced Chicago document shredding company to make sure your files are completely destroyed. Proshred® Chicago has worked for years to keep information safe in businesses throughout the region, and we can develop a custom plan of action for you. Give us a call to get started today! (708) 263-4292