DOWN TO BUSINESS
A look at small business questions from the Southwestern Oregon Community College Small Business Development Center (SBDC).
By Arlene M. Soto CMA, CGBP, Southwestern SBDC Director
My business is being buried in paper, how long do I need to maintain business paperwork?
Business owners often find themselves keeping records for much longer than necessary. Once the year-end tax return is done many records are stored then never looked at again until the boxes take over all the storage space.
Tax professionals, accountants, organizers (see NAPO, National Association of Professional Organizers for listings of professional organizers) and financial advisors are a good source of information regarding how long to maintain specific business records. For general guidelines on records retention go to “The Record Retention Guide” at http://www.cpa.net/resources/retengde.pdf. IRS Publication 552 “Record Keeping for Individuals” and IRS Publication 583 “Starting a Business and Keeping Records” are available at www.irs.gov.
Many records must be kept permanently such as year end financial statements, articles of incorporation, bylaws, stock records, pension records, contracts, leases, tax returns, deeds/titles, general ledgers and more. Some records should be maintained ten years such as accounting journals and worker’s compensation reports. Other records should be maintained seven years such as accident reports, sales records including sales tax reports, payroll tax returns and W-2 forms. Invoices and equipment leases should be maintained five years after they expire. General correspondence, expired insurance policies and employment applications should be maintained for three years.
Records that can be destroyed at the same time should be stored together to make it easier. Boxes should be labeled with the contents, date stored and the date the contents can be destroyed. If you have any doubts about destroying a particular document it’s best to ask your accountant how long to keep it. Some records such as records about environmental hazards on your property may have legal ramifications so talk with an attorney before destroying those. Identity theft is another issue to consider with records storage. New guidelines are available to protect employee social security numbers from those who should not have access to them.
Technology may be another option for document storage if you don’t have enough physical space. Talk to your accountant about what options are available and acceptable for long term record storage.
The SBDC is a partnership of the U.S. Small Business Administration, the Oregon Small Business Development Center Network, the Oregon Business Development Department and Southwestern Oregon Community College. Arlene M. Soto has been the Director of the Southwestern Small Business Development Center since July 2007. To ask a question call 541-756-6445, e-mail firstname.lastname@example.org, or write 2455 Maple Leaf, North Bend, OR 97459. Additional help is available at the OSBDCN Web page www.bizcenter.org.