What Documents Should a Business Shred After Tax Season?
Tax season is a whirlwind of preparing financial documents and meticulously organizing your records. Once things have quieted down, you and your business are left with a lot of exposed sensitive information that could put your business and/or stakeholders at risk.
To help protect your assets, here are some of the documents you should shred after tax season to ensure that you’re maintaining privacy for qualified parties while staying in compliance with data regulations.
Old Tax Records
Start by shredding any old tax records that have exceeded the recommended retention period by the IRS.
The IRS recommends maintaining tax records for a minimum of three years after filing tax returns as a general rule. However, if your business has losses like bad debt deductions, the IRS recommends maintaining tax records for at least seven years.
Destroying old tax records can help prevent unauthorized access to your company’s sensitive financial information.
Employers are required to keep employee records for a minimum of four years. After that time, however, you should consider shredding these documents to protect your employees’ privacy and prevent identity theft.
Examples of employee records include:
- Payroll documents
- W-2 forms
- 1099 forms
Anything with your employees’ personal information, like their Social Security numbers, salary information, or home addresses, should be shredded once the minimum retention time has passed.
Financial records like credit card and bank statements contain sensitive information that could severely damage your company if it falls into the wrong hands.
You should retain bank and credit card statements for at least seven years in case your business is subjected to a financial inquiry like an audit. Afterward, it’s a good idea to get rid of these documents to prevent unauthorized access.
Receipts and Expense Reports
In addition to financial statements, you should shred receipts and expense reports. While you should retain these documents for at least three years for tax reasons, they need to be eliminated once they’re no longer useful.
Client and Vendor Information
You may have records of your clients and vendors, such as their pricing agreements, contact information, and business contracts. Once these records have served their purpose, you should shred them to protect your clients’ and vendors’ privacy.
Financial Projects and Outdated Business Plans
These documents usually contain proprietary data or strategic information that bad actors could exploit. Shredding them as soon as they’ve outlived their usefulness will serve to safeguard the intellectual property of your business.
Securely Shred Critical Documents with SEAM
SEAM helps clients protect their sensitive information by offering paper shredding, hard drive shredding and total data destruction. We operate a mobile shredding truck out of Sioux Falls in order to better serve clients in the surrounding South Dakota and North Dakota areas.
We maintain stringent standards when handling our clients’ documents, so you never have to worry about your company’s most sensitive and exploitable data falling into the wrong hands. Contact SEAM today to learn more or request a quote.