How Long to Keep Property Management Records
Regardless of the size or type of property management business you run, you are required to keep certain types of financial records. If you are using a computerized accounting system, this will make it much easier for you to sort through the relevant records each year in preparation for filing your tax return.
Record retention is one area where many small businesses fall short. The best defence in the event of an audit is to be able to provide documentation that can explain and support your sales figures and deductions.
Examining Your Business Type Will Help You Establish a Retention Schedule for Property Management Records
For tax purposes, you want to keep records for as long as they are needed to document items reported on tax returns or to support items claimed on tax returns. The following is a general guide to record retention, but you should check with your accountant to see how long you need to retain specific documents:
- Corporate income tax returns: 7 years
- Payroll records: 3 years
- Accounts receivable and payable records: 3 years
- Sales and purchase records: 3 years
- Banking and credit card statements: 2 years
- Equipment records: 3 years
- Insurance policies: Permanent
- Legal documents: Permanent
However, if you are using a computerized accounting system, you may be able to keep most of your important financial documents for a longer period of time. For example, many programs offer a “customer” or item list that can be exported into an Excel spreadsheet and then kept for as long as you like.