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EPISODE 170: Time to Clean Out Your Filing Cabinet. A Guide to Record Retention

Join Jarrod and Steve Levy, a knowledgeable CPA and JD, as they delve into the fascinating realm of record retention. Discover the surprising truth that you don't need to hoard everything indefinitely. Don't miss out on the opportunity to enhance your knowledge by clicking the link below and accessing our convenient Guide to Record Retention.

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EPISODE 170 TRANSCRIPTION

Announcer:
Hello everyone. Welcome to The Millionaire Dentist Podcast, brought to you by Four Quadrants Advisory. On this podcast, we break down the world of dentistry, finances, and business practices to help you become the millionaire dentist you deserve to be. Please be advised, we do speak with an honest tongue and may not be safe for work.

Jarrod Bridgeman:
Hi, and welcome back to The Millionaire Dentist. I'm your host, Jarrod Bridgeman. Casey Hiers is out of town at the moment, making some moves, and doing some deals and shaking babies, I guess is how they say. So today I have got a special guest. His name is Steve Levy. We call him Pipes around here because of his magnificent singing voice. Steve, how are you?

Steve Levy:
Great and how are you?

Jarrod Bridgeman:
Good. Steve, summer's starting to end here pretty soon and kids are going back to school and all that kind of stuff. Did you do anything fun this summer?

Steve Levy:
Well, I've been to some concerts, as the Pipes nickname would blend to. Yeah.

Jarrod Bridgeman:
What was your favorite so far?

Steve Levy:
Foo Fighters.

Jarrod Bridgeman:
Oh, nice.

Steve Levy:
They have returned strongly, so-

Jarrod Bridgeman:
All right.

Steve Levy:
Yeah, they're rocking.

Jarrod Bridgeman:
Nice. So today you've come to talk to us about a very, very, I would say, sexy subject. This one just gets people's motors running, you know what I mean?

Steve Levy:
Oh, yeah.

Jarrod Bridgeman:
So we're talking today about

Steve Levy:
Record retention.

Jarrod Bridgeman:
Oh, there it is.

Steve Levy:
I know.

Jarrod Bridgeman:
For those listeners out there, and the topic of record retention, are you talking... Because you're a tax guy.

Steve Levy:
Right.

Jarrod Bridgeman:
You're a CPA and a JD and a overall BA, that's badass. This is in terms of what they should keep for taxes each year.

Steve Levy:
Really what they should keep for their life each year.

Jarrod Bridgeman:
Okay.

Steve Levy:
Personal business, not hoard like some of us have tended to do, and-

Jarrod Bridgeman:
So we shouldn't keep every record forever.

Steve Levy:
No. That would really pile up and be unnecessary.

Jarrod Bridgeman:
In case you've got an entire basement of filing cabinets or something?

Steve Levy:
Even that, you could use your basement for better use than that.

Jarrod Bridgeman:
So is there a period of time you should keep records, like five years worth, two years worth?

Steve Levy:
It really depends on what it is. If we're looking at tax returns, that's one of the things that we suggest that you keep forever. If it's things like bank statements and canceled checks and things like that, a year is good for that. So it varies on what you've got going.

Jarrod Bridgeman:
This is all based off a little handy dandy sheet you gave me.

Steve Levy:
Sure.

Jarrod Bridgeman:
So the cool thing is that I'll make these sheets available in a couple places on our website for you guys to download, probably connected to this podcast we're listening to right now. So that'd be pretty cool. I think that'd be a nice thing for you guys to check out, because there are quite a few different things. It's like keep for one year, some you keep for three, some you keep for six, some forever and ever. A big one would be life insurance policies.

Steve Levy:
Yeah, that's definitely one. For individuals, medical records, health insurance policies, really big stuff.

Jarrod Bridgeman:
Gotcha.

Steve Levy:
Wills, contracts-

Jarrod Bridgeman:
A lot of things that deal with life and death and-

Steve Levy:
Exactly.

Jarrod Bridgeman:
Okay. Fun fact about keeping things forever. I still have my original social security card. My mom, when I was a child, laminated it for me.

Steve Levy:
Nice.

Jarrod Bridgeman:
Says right on the back of the card, do not laminate.

Steve Levy:
Oh. Interesting.

Jarrod Bridgeman:
That's fine. She can't read. It's okay. I hope to God she is not listening today. Steve, why is it important to clear things out to get rid of ones that are not needed for long periods of time?

Steve Levy:
Well, first for space reasons, both for business and individual, you just don't need. There's a lot of documents collected as you can imagine over time and it can just be a drag. It can be unsightly as things pile up in an office or a home, and it's just not needed at all. It's time to get rid of stuff that-

Jarrod Bridgeman:
It probably helps if you're organized to begin with them. I don't remember what show I was watching, but they had the show where it was like this guy brought in just a box marked 2022 with every receipt ever in a box.

Steve Levy:
Yeah, that's rough.

Jarrod Bridgeman:
So we discussed a little bit of which type of records are important to keep forever, life, death. I'm guessing house things like deeds, would that fall into that purview as well?

Steve Levy:
Yeah, that's a great one. Deeds, medical records, home insurance policies is another good one. Health insurance policies.

Jarrod Bridgeman:
This would be for both individual records and business, right?

Steve Levy:
Yeah. I mean that lends itself to really both. So on the business side, you've got mortgages, you've got contracts, board of directors meetings, if you have that, depreciation schedules, financial statements, all the tax returns. Because it's a drag if you don't have your tax returns handy and you have to dig those out from maybe the IRS or a state. It's really pulling teeth and it's incomplete too. So to have those tax returns complete and you can store them on whatever drive you have. You don't obviously have to have them on paper. You can scan them in, store them somewhere that's secure, obviously.

Jarrod Bridgeman:
Secure and preferably maybe backed up somewhere as well.

Steve Levy:
Yeah, certainly. So if you're not going to keep it, or keep your paper file somewhere. It's-

Jarrod Bridgeman:
Keep that somewhere safe.

Steve Levy:
Yeah.

Jarrod Bridgeman:
Not next to the fireplace.

Steve Levy:
Right. Paper and fire, not a good mix.

Jarrod Bridgeman:
That's what I read. I've read that. So we've talked a little bit, but about when is a good time? Is it spring cleaning?

Steve Levy:
That would be good, certainly time that you have available to go through things. I would suggest that you have a certain time in the year that you're going to do this, because each year is a time to see what can I get rid of this year? What can I get rid of that's been around for three years or six years, and what do I have to keep forever? So maybe there's a great time, in the year, to really go through things on a business and personal level so that you get into the habit of that and don't let things pile up, which we all do.

Jarrod Bridgeman:
Yes. With these things that we're saying you don't need to keep forever, do you suggest getting rid of them in a certain way? Should they be shredded or can you just toss them?

Steve Levy:
Shredding is the best. With security and suspicious activity, you just don't want to take a chance, because most of the time we're talking about maybe pay stubs, confidential things that you wouldn't want out there. So shredding is certainly the best route to take. You can have a home shredder for your home stuff and obviously businesses have companies that they use for that type of thing. So it's best to be on the careful side for shredding really confidential and proprietary types of things.

Jarrod Bridgeman:
Let me ask you, Steve, you obviously work with a lot with taxes and a lot with our clients. When you're working on these, have you ever received things that people gave you that you're like, this is not even needed whatsoever?

Steve Levy:
Oh, yeah. Well, a lot of that on the individual side tends to lean towards personal expenses, which you can't write off. Here's my grocery bill. Can I write off what I eat? I've seen it all. It's here's services for walking my dog, that, hey, it helps me work so it takes time away from me having to do that. Can I write it off? It feels like a business expense. Well, not quite.
Really things that lean towards what everybody has to go through, eat, drink, pay for your house, except for your mortgage interest and real estate tax. There's exceptions, but for the most part, you're just not going to be able to deduct everything you spend on your personal life. It's just not the case.

Jarrod Bridgeman:
That's what we got you for.

Steve Levy:
Yeah.

Jarrod Bridgeman:
To tell me that.

Steve Levy:
To weed out that. What we do is send organizers to our clients and show what you had last year on your return. So that's focuses folks to come up with similar items for this year as well.

Jarrod Bridgeman:
Okay. That's sticking with what we like to do, which is being proactive.

Steve Levy:
Absolutely. Yeah, it's important.

Jarrod Bridgeman:
Right. It makes it easier for our team. It makes it easier for the client. Things get done on a faster pace.

Steve Levy:
Yeah.

Jarrod Bridgeman:
Steve, is there anything else you wanted to add to this conversation today?

Steve Levy:
I would say that just don't keep everything, really start getting rid of things, so that you can avoid the clutter, get more organized in your business and personal life, and just roll with that.

Jarrod Bridgeman:
Perfect. Steve, thank you so much for coming in today. For all of you people out there that want to come and listen to us chat, we are going to be in St. Louis, end of this week actually. After that we'll be in Minneapolis, and then from there, moving on to Houston. We're going to be all over the place. It's going to be a lot of fun. Please go online and register. You can visit fourquadrantsadvisory.com/events to do that. Keep an eye out for these what to keep cheat sheets that Steve created for me, and we'll get to it. Thanks, Steve.

Steve Levy:
Sounds good. Thanks, Jarrod.

Announcer:
That's all the time we have today. Thank you to our guests for their insight and for sharing some really great information, and thank you to you, the listener, for tuning in. The Millionaire Dentist Podcast is brought to you by Four Quadrants Advisory. To see if they might be a good fit for you and your practice, go on over to fourquadrantsadvisory.com and see why year after year they retain over 95% of their clients. Thank you again for joining us and we'll see you next time.