On the federal level, the Occupational Health and Safety Administration OSHA requires businesses to retain records on workplace injuries for five years. Discrimination claims. Requirements for claims about discrimination also vary by state and the type of discrimination age, gender, race, disability, and so on.
Department of Labor, also have recordkeeping requirements for discrimination claims. Employee pension and retirement plans. You might want to permanently keep records for employees who receive pension or retirement plan benefits from your company plan to protect yourself if the employee files a claim many years after retirement.
In addition to pension and retirement plan documents, permanently keep business formation documents, corporate by-laws, annual reports, shareholder meeting minutes, and business licenses and permits to help explain to potential buyers, lenders, and others the actions and decisions you made while running your business.
It can never be assigned to another business, and you should retain it permanently, even if you no longer operate your business. If you have an "occurrence-based" insurance policy, you will want to keep it indefinitely. Occurrence-based policies insure you as long as the policy was in effect on the date that the event giving rise to the claim occurred. Should you discover damages or other losses after you have dropped or changed your policy, your coverage remains in effect.
By contrast, a "claims made" policy will cover you only if the policy is in effect when the claim is filed. You might also have leases for your business premises, insurance policies, and business loan records, among other documents. Leases and insurance policies can be used to help your negotiating position when it comes time to renew, and you will want to keep them until they are replaced. You should retain lease and business loan documents that pertain to tax deductions for the seven-year period described earlier.
Keep records of satisfied loans for seven years also. You needn't keep bank and credit card statements longer than a year, unless they contain entries that you are using for your tax filing.
If they do, follow the rules for tax documents discussed earlier. In today's digital age, both paper and electronic records are acceptable forms of documentation. Make sure that records you have scanned into your computer files are legible, however. The IRS recommends you back up your paper documents electronically in case of flood, fire, or other disaster.
Choose a method of electronic storage--whether on your computer, in the cloud, or on a thumb drive or external hard drive—that offers the most safety and security against identity theft. Make sure your computer is password protected, and consider using an encryption program like Microsoft BitLocker, Apple FileVault, or a third-party program.
Choose a well-protected cloud storage program, and use a unique and complex password with two-factor authentication. The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or will be formed by use of the site. The attorney listings on this site are paid attorney advertising.
Keeping your own records prevents any potential problems if your CPA sells their business, retires, loses their records in a fire or flood, or dies. Deeds, titles, stock and other investment authentications and valuations would be the exception to the scan rule. Ellen Chang is a freelance journalist who is based in Houston and writes articles for U. Chang previously covered investing, retirement and personal finance for TheStreet.
She focuses her articles on stocks, personal finance, energy and cybersecurity. She is a proud graduate of Purdue University and a lover of random acts of kindness, volunteering and cats and dogs.
Follow her on Twitter at ellenychang and Instagram at ellenyinchang. Select Region. United States. United Kingdom. Ellen Chang. Editorial Note: Forbes Advisor may earn a commission on sales made from partner links on this page, but that doesn't affect our editors' opinions or evaluations. Compare the best tax software of See our picks.
Was this article helpful? Share your feedback. Send feedback to the editorial team. Rate this Article. Thank You for your feedback! If you file a claim for a loss of worthless securities or bad debt deduction, you must keep records for seven years.
Additionally, if you amortize, depreciate, or buy or sell property, you should keep property records until the statute of limitations expires for the year in which you dispose of the property. Before getting too excited and throwing your old returns away, check to make sure you do not need to keep it for other purposes. For instance, certain creditors and even some insurance companies may require you to keep records longer than the IRS does.
If you do decide to get rid of tax documents, make sure to shred them. Tax returns contain sensitive information that identity thieves love. The best way to store hard copies of tax documents is in a fire-proof safe.
Along with your tax records you can keep other important documents like the deed to your house, mortgage and insurance information, your will or trust documents, and passwords to bank and brokerage accounts.
This way, if an emergency arises, that individual will know how to access any documents they may need to keep your affairs in order. The IRS accepts digital copies of documents as long as they are legible. This method takes up far less space and is easier to organize than a stack of papers. At the beginning of this post you were wondering how long you should keep tax returns — and hopefully you found the answer.
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