Do you have boxes of old invoices and other financial records taking up valuable space in your shop’s storage area?  If you’ve been in business for over four or five years (to say nothing of our store’s 40 years), you probably have accumulated a lot of paper. We have always kept 7 years worth of records, and were surprised to recently discover that the legal requirements for how long these boxes of paperwork need to be kept has changed.

Here is the latest from the IRS:

Keep copies of your filed tax returns. They help in preparing future tax returns and making computations if you file an amended return. Regarding other records, if:

1You owe additional tax but have not either neglected to report income, filed a fraudulent return or not filed at all; keep records for 3 years.

2You file a claim for credit or refund after you file your return; keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later.

3You file a claim for a loss from worthless securities or bad debt deduction; keep records for 7 years.

4Keep all employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.

In other words, most of the time you only need to keep records (aside from filed tax returns) for 3 years, and payroll records for 4 years.  There are undoubtedly some reports and papers that you want to keep indefinitely for your own use, to help track the store’s sales and profitability — especially if you someday wish to sell your business.

What to do with old invoices, customer receipts, and other disposable paperwork? If your area has paper recycling and you feel that the information doesn’t contain confidential data, you could box up the papers and recycle them.  But a more secure way to get rid of old papers is to shred them.  You can purchase a shredder at a fairly low price through an office supply store, although the lightweight ones don’t always hold up to heavy duty. Or you can find a bank or commercial service that will take papers and shred them for you, usually for a fee.

Once shredded and stirred up a bit, your records are safe from prying eyes— so keep in mind that they can serve a new purpose in your shop. Shredded paper is great for cushioning items being gift boxed or shipped, and customers will be pleased to note that you are creatively recycling the old papers you no longer need.

Happy Retailing,

Carol “Orange” Schroeder