What Records Need to Be Kept After a Company in Clearwater Closes?
Once you decide to close your business there are numerous steps you must take. These include notifying employees and clients of the closure, resolving outstanding matters with vendors and contractors, and liquidating valuable company assets.
There are also important records you need to keep.
You should keep unemployment compensation claims for three years after the date of filing, although there is no specific Florida law regarding records retention and employment personnel files.
You should also keep files on hours worked and payroll information for all current and past employees for seven years. If you have terminated a worker because of improper behavior, consider keeping their file indefinitely in case they file a lawsuit against you or your business.
Even after a company in Clearwater is closed, you must keep most financial records permanently.
These include copies of tax returns (federal, state, and local) and any supporting documents, canceled checks, bank statements and transaction records, accounting journals, general ledgers, tax records, contracts, financial statements, and insurance policies.
Store these at an off-site location so they won’t be destroyed in the event your home or office is damaged by fire, storm, or other natural disaster.
The “three-year rule” implemented by the IRS leads many small business owners to believe they are safe to destroy company tax documents three years after they close their doors.
The problem with this theory is that there are exceptions to the three-year rule. If you have an underpayment of more than 25%, the IRS can come after you for up to six years.
If there’s fraud or if no return was filed at all, there is no statute of limitations—meaning the IRS can go back as far as it wants to collect taxes and penalties (although it rarely does).
In addition to the standard three-year rule, other exceptions include certain types of tax deductions and credits. For example, if you claim a deduction or credit for the general business credit, you need to keep your records.
The same applies if you take an energy credit or deduction. In these cases, it’s best to keep your records for at least six years.
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