How Long Should I Retain Company Records After a Company Closes?

State and federal requirements for business record retention may differ.

Follow IRS Guidelines

The Internal Revenue Code requires that you keep all business records that support income and deductions until the applicable period of limitations expires. Keep income and expense records for three years, employment tax records for four years, bank statements and contracts for six years after expiration and taxable asset disposition records for three years.

Reasons to Keep Records Longer

Some states require that you keep business records longer than the federal period of limitations. There are also federal guidelines that require permanent retention of some paper records. If you have filed a fraudulent tax return or failed to file a tax return, you must keep business records indefinitely. You should also retain annual financial statements, corporate stock records, general ledgers and journals, real estate records and tax returns permanently.

Bottom Line

The safest decision is to keep all records permanently; however, that may not be practical. At the very minimum, follow the guidelines for your state or for the IRS, whichever is longer.

References

• Internal Revenue Service: Publication 583 Starting a Business and Keeping Records
• BKD CPAs & Advisors: Guidelines for Tax Record Retention