When it comes to storing old financial documents, I’ll admit that I do have a hoarding problem. Despite “knowing better,” I’m hesitant to eliminate even old receipts in case one day I’m subject to an audit and the only thing keeping the IRS from confiscating my business is an $8 gas receipt from 1993.
All kidding aside, financial documents do have an expiration date, and it's important to know what they are so you don’t burden your mind (and your office) with mountains of needless papers.
Unless there is evidence of fraud, the IRS can go back no more than six years to conduct an audit because they suspect a substantial error. Support materials for tax returns should be kept for three years after the return is filed. Returns themselves should be kept for six years. Payroll records should also be kept for six years. Monthly and quarterly bank statements can be shredded as soon as annual statements arrive. ATM receipts can be shredded as soon as your bank reconciliation is complete.
If you're like me, though, and still feel paranoid about throwing away documents, I suggest buying a high speed scanner (50 pages per minute) and storing everything electronically.Read the full article at Entrepreneur.Read more Finance Watch articles.