Most companies generate huge amounts of paperwork and records. In many cases, the more records you maintain the better, as long as the paperwork is filed in an organized fashion. Nonetheless, there’s bound to be a time when your small business starts outgrowing its file cabinets or runs out of space for bankers’ boxes in the records room. Before you begin indiscriminately purging them, know the guidelines for how long you should keep company records.
In most cases, the Internal Revenue Service requires that companies hold records related to taxes for three years. Copies of tax returns should be kept indefinitely. And tax records should be kept for longer
in many situations -- such as when your small business doesn’t file a return, or if it files a fraudulent return, in which case you should maintain records forever.
Bank and Cash Records
The Better Business Bureau recommends holding onto bank statements for three years, and Bankrate suggests storing them for at least seven years. Records of bank reconciliation reports need be maintained for only two or three years, and duplicate bank deposit slips should be held for three years. Cashbooks and expense reports should be kept for seven years, and petty cash statements and "spiff tickets" -- records of immediate cash bonuses paid to employees -- need to be held for only three.