How Long to Keep Your Records for IRS

It's autumn in the Black Hills...time to rake leaves, gather wood, insulate and get organized. Yikes! Think of it as part of the "nesting in" thing. But think how far ahead of the race you will be if you get started now. Before you start it is helpful to know what records you should keep, how long to keep them and which you can pitch.

According to the IRS, &auot;You must keep your records as long as they may be needed for the administration of any provisions of the Internal Revenue Code. Generally, this means you must keep records that support an item of income or deduction on a return until the period of limitations for that return runs out."

Okay, so what does that mean? Leave it to the Small Business Administration to translate. Here is what they have to say:

Accident reports/claims (settled cases) Accounts payable ledgers and schedules Accounts receivable ledgers and schedules Audit reports Bank reconciliations Bank statements (also see "cancelled checks below") Capital stock and bond records (ledgers, transfer registers, stubs etc) Cash books Chart of accounts Checks (canceled-see exceptions below) Checks (canceled-for important payments, i.e. taxes, purchase of property, special contracts, etc. Checks should be filed with the papers pertaining to the underlying transaction) Contracts, mortgages, notes and leases (still in effect) Correspondence (general) Correspondence (general) Correspondence (routine) with customers and/or vendors Deeds, mortgages and bills of sale Depreciation schedules Duplicate deposit slips Employment applications Employment tax returns Employee time books/cards Employee withholding Expense analyses/expense distribution schedules Financial statements (year end, others optional) Garnishments General/private ledgers, year-end trial balance Expired insurance policies (longer retention may be desirable) Insurance records, current accident reports, claims policies, etc. Internal audit reports (longer retention may be desirable) Internal reports (miscellaneous) Inventories of products, materials & supplies Invoices (to customers, from vendors Journals Magnetic tape and tab cards Minute books of directors, stockholders, bylaws & charter Notes receivable, ledgers & schedules Options records (expired) Patents, copyrights, trademarks & related papers Payroll records and summaries Personal files (terminated) Petty cash vouchers Physical inventory tags Plant cost ledgers Property appraisals by outside appraisers Property records including; cost, depreciation reserves, year-end trial balances, depreciation schedules, blueprints & plans Purchase orders Receiving sheets Retirement & pension records Requisitions Sales commission reports (longer retention may be desirable) Sales records Scrap and salvage records (inventories, sales etc.) Stock & bond certificates (canceled) Stockroom withdrawal forms Subsidiary ledgers Tax returns and worksheets, revenue agents' reports and other documents relating to determination of income-tax liability Training manuals Union agreements Voucher register and schedules Vouchers for payments to vendors, employees etc. (includes allowances and reimbursement of employees, officers, etc. for travel and entertainment)

10 years 10 years 10 years Permanently 2 years 3 years Permanently Permanently 10 years 10 years Permanently 10 years 2 years Permanently 2 years Permanently Permanently 2 years 3 years 4 years 10 years 10 years 10 years Permanently 10 years Permanently 3 years Permanently 3 years 3 years 10 years 10 years Permanently 1 year Permanently 10 years 10 years Permanently 10 years 10 years 3 years 3 years 10 years Permanently Permanently 1 year 1 year Permanently 1 year 3 years 10 years 10 years 10 years 1 year 10 years Permanently Permanently Permanently 10 years 10 years

Of course if you are planning on writing a book about your life as a business owner or if you are on the firing line for a law suit, save it all.

If storage space is of a premium though, take some time now to go through your files and clean them out.