How Can You Best Prepare For The Upcoming Tax Season?

Lesley Mast | December 4th, 2013

It’s the holiday season, and you know what that means. I’m not talking about shopping or decorating or eating until your heart’s content. I’m talking about cleaning out those filing cabinets and getting ready for tax time! The more prepared and organized you can be as you approach tax season, the smoother a process you can create for yourself or your business. 

How Long Should You Keep Financial Documents?

This is the perfect time of year to get organized for 2014. One of the most common questions that CPAs are asked is “how long do I have to keep my paperwork?” Below is a table that shows a listing of some common documents and how long they should be kept. These are our best estimates of the minimum time a business or an individual should keep these documents.

Item Keep for
Bank reconciliations 1 year
Bank statements Permanently
Annual brokerage statements Permanently
Capital stock records & minute books Permanently
Cancelled checks 7 years
Mortgages & notes, current Permanently
General correspondence 3 years
Depreciation schedules Permanently
Employee expense reports 3 years
Employee payroll records 4 years
Annual financial statements Permanently
Insurance records Permanently
Invoices to customers or from vendors 8 years
Property records & appraisals Permanently
Retirement & pension records Permanently
Sales records 7 years
Tax returns & worksheets Permanently
Vouchers for payments to vendors 7 years

If you don’t want the actual, physical paperwork lying around your office, you can use an electronic document storage system. All you need is access to a computer and a scanner – it’s that easy! Just ensure you have proper security measures in place to prevent data loss in the event of a catastrophe. Also, when documents need to be destroyed, be sure to shred them to prevent identity theft and the loss of confidential information.

Be Prepared For Tax Season

After you have 2013 all cleaned up, you should be thinking about what your tax professional will need for the upcoming filing season. If your CPA doesn’t provide it, be sure to request a listing of what will be needed to prepare your taxes. This will help you in two ways:

  1. It will assist you in gathering your documents.
  2. It will help your CPA identify what documents they still need to receive from you.

Need Tax Help?

Don’t wait until March to take the time to gather up your tax documents. It helps having a designated folder or filing system that you can maintain throughout the year for your tax items. Once your official tax forms start to arrive in the mail in January and February, you’ll have a head start on collecting what is needed for your taxes. If you need assistance or additional advice on how to better organize and prepare for the upcoming tax season, contact Rea & Associates. Our team of Ohio tax professionals can help you determine what you need to do. Remember, a little time spent up front will save you more time in the end … so get cleaning!

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