Saving Paper Records
As for paper documents, which continue to multiply even in a theoretically paperless office, here are some recognized record keeping guidelines for businesses. In some cases, these may be more stringent than for personal files or even IRS recommendations. When a time frame is given, it refers not to the start of something but when the issue is closed.
Documents related to the formation or operation of a company, contracts, registrations (copyright, patents, trademarks) and legal correspondence: Keep permanently.
Insurance documents: Keep for six years. Claims that have been settled can be discarded after four years.
Tax returns and other tax related records (state sales tax for example): Keep permanently.
The IRS has a guide for keeping business records that every home office should consult. It is Publication 583, Starting a Business and Keeping Records.According to this, if you have employees you must keep all employment tax records for at least four years. As a general IRS rule, keep records that support income or deductions at least until the period of limitations for a tax return expires. This period varies according to different issues that might come up. Consult the IRS publication for specific time periods.