Construction Paperwork: How Long Do You Need to Keep Construction Loan Docs, Project Papers, and More
Unless your construction company has a physical storage space with unlimited capacity, you’ve likely considered how long you need to keep certain types of documentation. At ECL Software, we can help with a wide range of construction related tasks, including keeping track of fund control and loan documents.
Today we’ll share some of the details of that, along with comprehensive, easy-to-implement tips for retaining tax records and other project papers. Read on to learn more and then let ECL Software help your construction company just do it once.
How long to retain individual tax returns
Some experts claim that three years is long enough for an individual to keep their tax documents for an individual return. At ECL Software, we urge people to err on the side of caution and keep them for six years. Remember that this doesn’t just refer to tax returns, it’s also involves W-2s, K-1s, 1099s, canceled checks, receipts, or other proof of deductible expenses, and statements from your bank and brokerage accounts.
Three years from the date you filed your tax return (or the date it was due, if that’s later) is the minimum amount of time that you should save this information. However, we believe there’s one key factor to consider: The IRS’s time limit to begin an audit when income was significantly understated, yet there wasn’t fraud discovered, is six years. As a result, we believe that six years is the appropriate amount of time to retain these records.
How long for pass-thorough business-entities to hold on to documents
If you own a subchapter S corporation, limited partnership, LLP, or LLC, then you need a copy of your yearly Form K-1 for as long as you have a vested interest in the entity, plus seven years after that. You’ll also want to retain documents pertaining to the sale or disposition of your interest in that property for at minimum seven years after the date of disposition.
We advise that corporations keep corporate tax returns indefinitely.
Retention times for construction companies
A construction company should keep their tax records indefinitely as well. The good news is that cloud computing and data storage lets you achieve this without giving up an entire building to it. You want this information on hand in case your construction company is ever audited.
Finally, this takes us to project records. This includes change orders, documents, contracts, drawings, field notes, all correspondence, specifications, schedules, monthly reports, etc. All of this should be kept for as long as is required by the state in which the project was completed. In fact, we recommend you keep it for the minimum requirement plus one year.
If you have questions about how to organize the many documents needed to successfully run a construction company then it’s time to reach out to ECL Software. We offer unique solutions and ideas to help your company better communicate and run more efficiently.