To keep or not to keep, that is the question. Good record keeping is essential to making your financial life easier and can save you money and time in the long run. But in regards to record retention, how long is too long? Some original documents should be kept permanently (think birth certificate and social security card), whereas others can be shredded after seven years (bank statements and canceled checks), and still others have much more unique retention lengths.
The thought of sorting through any mass collection of documents can be daunting, especially if you have the fear of accidentally shredding something irreplaceable. To make it easy, we’ve identified some of the most commonly questioned records and formatted them into an even easier-to-follow chart below.
Hard to replace items such as birth and death certificates, custody agreements, and licenses to practice among others should be retained permanently. We recommend you store them in a fire-proof or indestructible safe deposit box to guarantee their protection. Generally, financial documents should be saved for seven years if needed for tax purposes; insurance information should be kept until it expires or is no longer needed.
Small business records
The majority of small business records should be kept for seven years: all documents that prove income, purchases and expenses, travel and other deductions, etc. All records of employment should be kept for at least four years. However, some business records need a permanent file. Many industries set their own standards so be sure to inquire about specific policies.
In prudent record retention, organization is key. Additional questions? Your D.A. Davidson Financial Advisor can help simplify the process. Get started now.
D.A. Davidson does not offer tax advice; please consult with your tax advisor for any additional retention requirements. Information contained herein has been obtained by sources we consider reliable, but is not guaranteed, and we are not soliciting any action based upon it. Any opinions expressed are those of the author and based on interpretation of data available at the time of original publication of this article. These opinions are subject to change at any time without notice. Investors should consult their financial and/or tax advisor before implementing any investment plan.