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PKF Texas – Entrepreneur’s Playbook®:Document Retention Policies

by | Mar 19, 2010 | PKF Texas - The Entrepreneur's Playbook®

Note: Running Fridays in FromGregsHead.comis a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on KPRC 950AM. Audio files can be found on the PKF Texas – Entrepreneur’s Playbook® page of the PKF Texas website. 

What is your company’s document retention policy?  If the answer is “keeping everything forever,” you may be opening yourself up for headaches down the road.

How long should you keep your financial reports and supporting documents?  From a tax compliance standpoint, the federal statute of limitations will begin on the due date of the return or when you file your company’s federal return whichever is latest.  The federal statute of limitations runs for three years.  State statutes vary by state. Most companies consider a date between five and seven years for holding records.  Check with your tax advisor re your status.

There are documents that should be kept indefinitely. These records include annual federal and state tax returns, articles of incorporation, certain year-end payroll filings, etc.

Take an audit of the critical documents that exist within your company and have a plan for tracking, accumulating, storing and destroying those documents.  Use a similar process for electronic documents and communications.

Any document retention plan you develop should be reviewed by legal counsel for completeness.  Remember, a document retention program is only as good as you maintain it.  Therefore, the key is to have a well documented policy, train your employees on the policy and follow it to the letter.
 

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