When it comes to gathering and organizing all of the different tax preparation records and information for your business tax preparation- the papers can stack up quickly. The accumulation of years of tax returns, receipts, and other important business information could take several days to sift through. People wonder if it’s even necessary to be saving tax records and documentation.
The truth is that while it’s extremely important to keep certain business and personal tax information available and readily organized, many of these documents only need to be kept for a maximum of six years.
The following documents that deal with tax preparation should be kept for at least six years:
- Tax receipts
- Business records
- Employee business expenses
- Closing papers from the sale or purchase of a home
- Investment records
- Payroll records
While the statute of limitations for record keeping in most cases is three years, it may be a good idea to be saving tax records indefinitely.
Some other documents to hold indefinitely are:
- Tax Returns
- Inheritance records
- Stock and bond basis records
- Pension Documentation
During the past year a client came to our office with a notice from the State of Pennsylvania which was requesting a copy of the clients 1983 tax return. Being a senior in high school at the time my office was not responsible for this omission but this example does highlight the need to retain tax preparation documentation – at least the tax return – indefinitely.
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