By now you should have all of your taxes filed, unless you filed an extension. Now is a good time to consider what records and files you should keep and what you can discard. The paperless office is still a distant dream to me, but we can try to cut down on how much paper we keep by following a few basic guidelines.
The IRS website (www.irs.gov) offers official several informative publications on record retention. For example, Publication 552 is for individuals and Publication 583 is for for businesses. Most states also have easily accessible websites that provide guidelines and recommended record retention policies.
The list below is a general list of documents along with suggestions regarding how long to retain them. Of course, you should always consult your own accountant for specific information related to your particular business situation.
I use a rolling system of record keeping. I keep the current year and last year's records in file drawers in my office. For older records, I have a set of six large totes in my attic. Five of these are labeled by the year, while the other one is labeled Returns - Keep Forever. Despite what the government guidelines say, there are some records that I like to keep forever. I have this ridiculous idea that my great-grandchildren might find reading my old tax returns interesting when they clean out my attic some day in the far off future.
Using January 2010 as an example, here is what I do. In January of 2010, the 2003 tote came down from the attic. I then shred or burn the 2003 records and re-label the tote for 2008. I take the 2008 files from my office and load them into the tote, then the tote makes a return trip to the attic. Lastly, the 2009 records get shifted from the current year drawer to last year's drawer and we start all over again with 2010.