I was checking out my storage area and realized that I haven’t revisited my old papers in a while so recently I went through the old bins and started shredding lots and lots of papers. The thing about paper is that it doesn’t take a lot of room and I can easily place it somewhere and let it collect dust. But, this is not necessary. The IRS doesn’t need us to keep every single piece of paper that ever crossed our desk.
As a small business owner, we need to be more conservative with getting rid of paper but we don’t have to keep every single piece. The IRS suggests to keep the papers for 6 years if you have a small business but I prefer to keep it for 10 years, just in case. If you want more detailed information from the IRS, check out their website: How Long To Keep Records.
Does my small business have to shred documents and papers?
YES! It’s the law and your responsibility as business owners. Just because you may be a one-person small business, doesn’t mean you are exempt. You must shred any of the following documents and any papers that would relate to Fair and Accurate Credit Transaction Act (FACTA) and Health Insurance Portability and Accountability Act (HIPAA). Making this a regular practice protects everyone involved.
Shred Important Small Business and Personal Paper – Here is a list of papers and documents that are more sensitive and that must be shredded when you are ready:
- ATM receipts/Bank Statements – old expired cards. Closed accounts should be shredded too.
- Canceled and Voided Checks – Any canceled and voided checks need to be shredded especially if you have check images on your banks statements.
Credit Card Papers
- Credit Report – older copies of the credit report. Only keep the current copy for your records.
- Pre-approved Credit Card Applications – Shred any pre-approved credit card applications you get, especially if you don’t want them.
Medical and Dental Records – Any old records of your family and friends.
Legal Documents – Any old contracts or legal records that aren’t being used and are very old.
Investment Stock Transactions / Investment statements – You can keep the end of year summary transactions, but the individual entire years can be shredded. Also, if you access to online accounts, you do not need to keep paper copies of any account. Check your bank statement online first before shredding any papers.
Employee Records – Wait a year or two after a person leaves the company to shred any paperwork that has information for your employees.
Employee Paystubs – After you get the last statement of the year and it is OK, you can shred the rest of the pay stubs.
To add to the list above, here are other papers and documents you should shred to protect your personal life as well:
- Address labels from junk mail and magazines
- Pre-approved credit card applications
- Birth certificate copies
- Personal Canceled and voided checks
- Credit card bills
- Documents with your previous name on it
- Papers with old address, phone numbers, and email addresses on it
- Papers with pins on them
- Old Driver’s licenses and anything with your driver’s license number on it
- Expired passports and visas – keep the most recent expired passport just in case your valid one gets lost or stolen
- Old IDs like college IDs, state IDs, employee ID badges, military IDs
- Old Legal documents
- Any document with a signature – leases, loans, contracts, letters
- Unused luggage tags
- Documents with Social Security numbers on it
- Report cards
- Tax returns and documents / letters
- Used Travel details
- Used Airline tickets
- Utility bills – telephone, gas, electric, water, cable, internet, cell phone
What shredder to buy?
There are lots of shredders in the market. There are straight-cut are usually the less expensive because it is not as secure.
I prefer the larger freestanding cross-cut or micro-cut ones. I can shred the entire junk mail envelope into it and don’t have to separate the pages that just get recycled and the ones that get shredded.
How often should I shred?
After taxes were submitted is a great time to shred old tax documents. By doing this at this time, you can save space and reuse the boxes that were already stored away, thus saving space in your storage area.
I hope this helps you get rid of old papers, let’s take a poll. How often do you shred your documents? How many years of documents do you keep? Please share below. Thank you.