This isn't another sermon on the importance of financial
record-keeping. Just the opposite: It's about discarding
unnecessary records to free space in your overstuffed file
cabinets. But which records should you keep and which can you
trash?
Tax returns and supporting data should be kept for at least
seven years. Beyond that term, CPAs suggest keeping returns forever
(particularly if you have tax-deferred retirement accounts); you
may toss the backup materials.
Things like audit reports, financial statements, general ledgers
and journals should be stored through eternity, along with legal
correspondence, contracts, documents related to real estate
transactions (including capital improvements) and all corporate
records (from articles of incorporation to any paperwork relating
to shareholders).
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Six years is about the limit for keeping bank statements,
deposit slips, sales records, journals and any materials relating
to employee income or expenses.
Items that can be discarded after three years include canceled
checks, paid invoices, payroll records, depreciation schedules,
paperwork relating to expenses, donation receipts, real estate tax
bills and inventory records.
You can trash the rest--if you dare.
Paul DeCeglie is a former staff reporter for Journal of
Commerce and American Banker.