Taxes: What Should Your Business Keep or Shred?
Wed, Mar 31, 2021
By: Jim Beran
It's tax season again, which means that you should go through your tax files and shred documents that you no longer have to keep.
Shredding documents is a security measure that protects you – and could even prevent you from paying a huge fine since a criminal can't steal what doesn't exist. And, if a criminal can't steal those documents, you can't be fined for having poor security.
Shredding Business Tax Records
Shredding tax records is just one of the ways you can protect yourself; but what business documents should be shredded? The Internal Revenue Service recommends keeping certain records for up to seven years. You should keep those records for at least the same amount of time an individual is required to keep them.
Records to Shred
You can shred business tax records after a certain number of years. You should scan tax records related to employees before destroying them.
Keep for Three Years
- Bank statements.
- Receipts for deductions.
- Tax returns (or two years from the date you paid the tax).
- Supporting documentation for tax returns unless you need to keep them for seven years because you did not report income that is more than 25 percent of the gross income you showed on your tax return.
Keep for Four Years
- Employment tax records – four years after the date that the tax is paid or due, whichever is later.
Keep for Six Years
- Records for any income that you did not report that you should have reported.
Keep for Seven Years
- Canceled checks, unless they are important transactions, which you should keep permanently.
- Payroll vouchers.
- Records from filing claim due to bad debt or worthless securities if you claimed those losses.
- Depreciation schedules.
- The records for any return you never filed or if you filed a fraudulent return.
Additionally, if you have any records that are older than these recommended times, you should shred those records.
How Long to Keep Business Documents
Other documents you might keep for your business can also be sent to the shredder.
Old utility bills, receipts that are not related to your tax return and for items which you no longer have, extra copies of loan documents and mortgages, and expired schedules and insurance policies.
Contact Gilmore for Shredding Services
Whether you need shredding services on a regular basis or you need shredding services once or twice per year, you can count on Gilmore to shred your documents.
We can set up a schedule and leave locked shred boxes for you to fill. The locked boxes allow you to discard documents immediately upon the expiry of their retention period to make room in your filing cabinets.
The locks on the boxes keep the documents safe from prying eyes and sticky fingers. When the boxes are filled, we'll come and shred them right in your parking lot.
You can watch the documents being shredded and will receive a certificate of destruction. Contact Gilmore to discuss your shredding needs.