Purging Your File Room Ahead of Tax Season
In a letter written more than 230 years ago, Benjamin Franklin said, “in this world, nothing is certain except death and taxes.” You can’t fully eliminate the first, but you can make tax season more bearable by being prepared.
The term “purge” can refer to a wide range of scenarios, but in all cases, the meaning involves removing something that is unwanted, undesirable, or harmful.
When it comes to your files, the idea is to clear out those that are no longer needed. This is especially important during tax season. However, it’s not only important to know what you should purge, but also what you shouldn’t.
What Not to Purge Ahead of Tax Season
Having a document retention and destruction schedule is important. You will often find that you are holding onto documents that have outlived their usefulness or that you are legally required to destroy because they have exceeded their retention period.
Implementing a file room purge at the start of tax season will give you a clean slate so you can find the documents you need without digging through heaps of outdated documents. Equally important is not discarding records you need for tax filing or that you are legally required to keep.
Below is our general guide to what you should keep and what you can have securely shredded. Please check both state and federal laws to determine specific retention periods for your files.
Completed Tax Returns
These can legally be disposed of after the required retention period, but most tax advisors would recommend that you hold onto copies of your finished tax returns indefinitely so you can prove to the IRS that your taxes were filed and provides you with proof in the event of an audit.
If part of the reason for your purge is to eliminate paper documents to make space, then consider digitizing your returns for future reference and having the official documents shredded by a local, NAID AAA Certified shredding company.
Unless state and federal laws require otherwise, personnel records should be kept for at least three years following the termination of an employee. Payroll records, employee tax records, and any outstanding payments that have not been claimed should be kept indefinitely. Once the retention period has been reached, have these confidential documents securely shredded.
Sales Tax Returns
Tennessee requires that businesses retain their sales and use tax records for the current year plus the three previous years.
Business property records, such as depreciation, amortization, and depletion records, must be maintained for seven years beyond the full length of your ownership. These records are required when determining the basis of a sale and any related gain or loss for, a sale.
How to Purge Files Securely
Expired records should be shredded securely, meaning the documents are destroyed to the point that they are unreconstructible. Partnering with a local, reputable shredding company is a wise choice. They have the expertise, industrial equipment, and processes necessary for keeping your information secure and confidential.
Richards and Richards is Nashville’s oldest NAID AAA Certified shredding company, providing a full suite of shredding services to area businesses and residents. For more information or to book your shredding service, call us at 615-242-9600 or complete the form on this page.