Your desk is cluttered and your file cabinets are overflowing with paper. You can’t even close the drawers anymore, and your hard drive is screaming at you to delete some files and create some free space.
Guess what it’s time to do! That’s right, it’s time to go through all those files and pieces of papers and get rid of the stuff you don’t need any more. Before you get started, make a plan, it might take a couple days or even weeks (depending on how long you’ve been hanging on to stuff) to get through it all.. Decide if you’re going to start with the file cabinets or the computer files and then spend a couple of hours each day until the task is completed. Of course if you like this type of thing, the organizing and cleaning, and want to spend entire full days on it, then go for it, and let me know when you’re done, you can come do mine!
However you can’t just start shredding and deleting, you need to know what documents and receipts are important to keep and for how long. So below you’ll find a list of some personal and business items and a recommendation for how long they should be kept. If you really want to get organized and maybe even go paper free, take everything you want to save and scan it in to files on your computer. File them in individual folders for each year.
Tax Returns and related tax documents:
The IRS has three years from your filing date to audit your tax return; you also have three years from your filing date to amend your return if you make a mistake. However because tax laws are always changing and the IRS actually keeps your information a lot longer than this I would keep your returns and all documents relating to them indefinitely. The best way to file them would be to scan everything, and save as a pdf document.
Credit card receipts and statements:
Every month you should be reconciling your credit card statement. If everything matches up you can shred the receipts that are not related to taxes. I would also suggest that you keep the receipts for any large purchases. You only need to keep the statements for a few months unless they are tax related.
Bank Records, check registers, voided checks and check stubs:
Any banking related documents that are personal can be discarded after a year. If Business related I would suggest up to 10 years and of course if tax related keep them forever.
Phone bills, utilities and other personal bills only need to be kept for a year or shred them after you’ve seen the payment clear the bank. Most of us do our banking online these days, and even receive the bills electronically so you might not have anything to keep.
Medical records and insurance paperwork:
It’s suggested that you keep your medical insurance records like bills, copies of prescriptions and premium statements for five years after treatments ends. If you’ve claimed the medical expense on your taxes file them with the tax return and keep indefinitely.
Business Tax Returns and related documents – as discussed above, indefinitely!
Monthly Financial Statements – 3 years
Annual Financial Statements – indefinitely
Sales Invoice and payment slips (cash or credit) – 7 years
Expense Reports – 5 years
W2’s and reports to IRS for employer taxes – 7 years
Vendor payments, invoices and purchase orders – 7 years
Please keep in mind that the time frames I suggested are just that, suggestions and recommendations. Your accountant or business advisor might have different time frames they’d like you to use, and the government might have specific time frames that need to be adhered to for different types of businesses. If you don’t see a document listed here that you have a question on please either leave a question in the comments or send me an email. I’d be happy to research it for you.
This article was originally written and shared by me on Business Darlings. The blog has since closed it’s virtual doors, so I’m reprinting some of my favorite articles here for you.
Thanks for reading and have a great day!