How far back should I keep records?
An old client reached out to me about a sale I made over 6 years ago, but I didn't hold records that far back. What's an appropriate amount of time to keep records of your business and/or clients?
Hold records as long as possible. I would advice you have a records or archive centre to store such documents or you can also take the digital route (e-Filing) where all your records are in electronic form. The advantage with this is you get to save space.
Well the IRS requires a business to keep records for 7 to 10 years. Now as far as customer client CRM like information. One should invest in CRM products like SageACT, Salesforce, Goldmine, etc. all of these tools allow you to archive databases in compressed flat files. Just go my WalMart, buy DVD RW's and burn baby burn. You can store 4.8 Gigabytes per disc. Or, there is the cloud. Just pick one!
You need to keep records for 7 years for tax purposes. I suggest 10 years to be safe. Definitely verify that with connections in similar or related businesses.
To start with, classify and separate your records by categories and include the reasons you are keeping records as part of your organization system. I have found that holding on to records is fine as long as the space and security measures are in place to keep them, but once in awhile you will have to "clean house" if you keep building a client base. Also, contact information and POS designations should be in some type of system where you can look back over the past five to ten years.
You may have society standards if you are a member of a professional society and/ or if you are licensed in a geographic area such as a state. If you are not this may not be applicable.
Regarding various records, my accountant John A. Knutson & Co., PLLP advised me:
Bank statements and deposit records - 7 years
Insurance policies and records of claims - permanently updated as needed
IRA contributions records - permanently if non-deductible contributions are made
Retirement and pension benefit summary - permanently
Tax returns - permanently
Tax return documentation:
receipts and records of income and expenses - 7 years
stocks, bonds and other securities - longer of 7 years as long as you own them.
There are two things to consider here
1 - Legal requirements for record keeping in your country. Such as tax records etc. This is pretty simple as it's laid out in law for you to follow.
2 - Customer service.
This is more about what you offer as a business and how much info you can afford to keep. Sales data for example is pretty small compared with photographs for example.
If you want to offer the type of customer service then I would say keep everything for ever.
Data storage is pretty cheap although paper records can get expensive but it's all about the tradeoff between cost and benefit (marketing benefit that is).
Hope that helps.
Here is a good reference link:
You've got a ton of good recommendations here. As long as you have a written record retention policy and sick to it, legally you are covered. For service elements like you reference here you may want to operate according to customer demand. I'm sure it doesn't come up often but when it does, it helps to have a policy in place. A better question may be, "How do you manage the documents you keep?" A good document management system is critical to today's businesses. I'd be happy to discuss this with you if you're interested and can even perform a free analysis for you. Let me know!
One precautionary note: Have other responders ever had all their communications and records appear in court or be part of M/A discovery? With today's technology it is possible to keep everything, forever. But do you really want to?
Statistically public agencies keep records up to 7 years priors. I would recommend you keep records, at least electronically, up to 7 years. For this particular client, if you don't have the records, there is nothing you can do. Notify them, be honest, and double check your computer and files to ensure there is nothing you can share with them. For the future, keep your records for up to 7 years.