Records provide a paper trail of your business's activities, expenses, income and legal status. According the Environmental Protection Agency, the average office worker uses about 10,000 sheets of copy paper a year. Not all of those sheets end up as business records, but enough of them do that you can quickly run out of storage space if you keep them all. Getting rid of unimportant papers and knowing how long to keep the important ones will free up room in your filing cabinet.
Keep contracts, articles of incorporation and other legal contracts indefinitely. Bills of sale for corporate assets, inspections by OSHA or local authorities, permits, stock and bond transactions and any records from lawsuits in which the corporation is involved also need to be kept permanently.
The Internal Revenue Service requires you to keep your tax returns and all supporting documents the period of limitations runs out for the return to be reviewed or amended. This is six years. Supporting documents include receipts for expenses, charitable deductions and other credits. The Massachusetts Society of CPAs recommends you keep these records for seven years.
You should keep records on all current employees for as long as they are employed, and records on discharged employees for seven years after termination, according to the Massachusetts Society of CPAs. You want the records in case an employee files a suit against you for wrongful termination, discrimination or even a workplace injury. The IRS advises you should keep all records pertaining to employee taxes, such as withholding, for four years after the taxes are due or the date you pay the taxes, whichever is later.
You can discard canceled checks and deposit slips once you've reconciled your bank statement. Most banks will provide copies of these for a fee, if needed. If your bank doesn't provide copies, you may wish to hold onto them for three years. You can discard correspondence that doesn't involve legal or financial matters yearly and toss applications from people you do not hire, unless you want to keep some of these for future job openings.