HOWLONGDOYOUHAVETOKEEP YOURBUSINESSRECORDSLEGALLY?
Originally Posted at: https://rb.gy/evjmaw
Some records are required to be kept for longer durations than others, depending on the business and the type of documents. Well, you must note that apart from a few guidelines from government entities, you won’t be able to find many rigid and strict rules and regulations regarding how long you are required to keep your business records. However, you can make a strategy for record retention by thinking related to the purpose of a document and future situations that might arise.
There are a variety of potential legal and tax issues that could arise from discarding records that are required to be retained. Well, it goes without saying that keeping records and documents for an extended period of time consumes a lot of space and money. However, businesses are required to understand how long the businesses should keep their records. The response differs based on the kind of files and company policies.
We need not mention the fact that government departments have long emphasized record management because effective records management is considered essential to an effective and functioning administration. The Department of Administration Reforms Document Retention Policy India & Public Grievances and the National Archives of India is equally responsible for facilitating the formulation of the rules for the creation of the Records Retention Guidelines 2022 in terms of record management.
Reasons for Retaining Business Records
The first thing that strikes your mind when you think about records and document retention is an IRS audit. While you must note that you are required to present tax filings and to support documents if you are audited or wish to amend a previous tax return, there are several returns for retaining other types of documents and records.
Lenders whom you approach for financing purposes might require sales history, income history, and other related information and documents. When you are negotiating with insurers, landlords, and other vendors, that have a clear and written history of previous leases, policies related to insurance, and other contracts that carry the potential to strengthen your position.
In case you become involved in a lawsuit or dispute, you might require meeting minutes and written agreements that are capable of extending support to your position. If you decide to sell out your business, potential purchasers would want to review historical records as a segment of their due diligence. For the best business document storage, you must get in touch with Dox and Box, as it is the leading document management company in India.
How Long are Business tax Records to be Kept
Business income tax returns and other supporting documents are to be kept for at least 7 years from the tax year of the return. The IRS will audit your return, and you can amend your return in order to claim additional credits for a duration that varies from 3 to 7 years from the date you first filed. However, it should be noted that it’s a good idea to utilize seven years as your guide for keeping these documents.
If you are not filing a return at all, the IRS will come to you someday. The documents they are after are P&L statements, check registers, sales receipts, financial statements, expense reports, ledgers, and invoices.
Records that You Should Keep Permanently
Along with pension and retirement plan documents, you must permanently keep business formation documents, annual reports, corporate by-laws, shareholder meeting minutes, and business licenses in order to help explain to potential purchasers, lenders, and others the actions you made while running your business.
The EIN or Tax ID Number is like a social security number. Thus, you must note that it can never be assigned to another business, and you are required to retain it permanently, even if you no longer operate your business.
In case you have an occurrence-based insurance policy, you would want to keep it indefinitely. These policies insure you as long as the policy was in emphasis on the date that the event gave rise to the claim occurred.
Summing Up
If you are looking forward to getting associated with a firm that offers the best document storage service, then you must get in touch with Dox and Box. Dox and Box is the leading provider of a
range of records and document management services and solutions that are aimed at enhancing the overall business functionality.
The experts at Dox and Box will help you and your business design their data archiving policies with policies curated by the government in mind, and this will assist in determining how long the documents are required to be maintained.
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