Accounts payable records are important documents for an individual or business. Ideally, your business should implement a storage or filing system that allows owners and other personnel to retrieve receipts and records for assets and accounts when needed. While your business does not have to keep its accounts payable records permanently, it should keep them for at least 10 years.
A Decade of Records
How long you should keep your business records on file depends on the action, expense or event the document records, according to the Internal Revenue Service. Documents that pertain to transactions and payments should be kept for at least 10 years, according to Financial Web. Such documents include banking statements, contracts, accounts payable and receivable records and canceled checks.
Effective Record-Keeping Rocks
The primary reason to keep accounts payable records is if someone has a question about a sale or an old contract. In such cases, you need to be able to locate items pertaining to the sale or contract in a timely manner. Having access to accounts payable records is also important in case a client or employee sues your business.
Keep the IRS Happy
The IRS suggests holding onto records that support an item of income or deductions on a tax return until the period of limitations for that return runs out, which is the period of time in which you can amend your tax return to claim a credit or refund. This means you must have accounts payable records available so you may document gain or loss on a sale or disposal of an asset for the length of time in which the asset remains in service. Afterward, you must keep all records and receipts pertaining to the asset for an additional three years, according to QBalance.com.
More Than Recordkkeeping
To maximize space and minimize possible loss of records from fire, theft or destruction, your business may want to go paperless. By transferring accounts payable records to an electronic filing system, your business can reduce administrative costs and personnel time. Programs are available online and locally at office supply stores. Fees apply, and vary widely depending on the program. Automated accounts payable systems often provide electronic invoicing, payment services and online tracking/reporting.