Document and record retention is an important issue, and one that our Firm frequently receives questions about. Without knowing what the document retention guidelines are, document storage can quickly lead to physical space issues and other problems. At the same time, disposing of records too soon may create legal and tax problems. Although there are no set rules for the retention of all types of records, the following guidelines will help you determine what records to retain, and for how long. The retention period begins the first day of the year following the year in which the document was created or expired.
| Accident reports and claims (settled cases) | 7 years |
| Accounts payable ledgers and schedules | 7 years |
| Accounts receivable ledgers and schedules | 7 years |
| Audit reports of accountants | Permanently |
| Bank statements and reconciliations | 7 years |
| Capital stock and bond records (ledgers, transfer registers, stubs showing issues, record of interest coupons, options, etc.) | Permanently |
| Cash books | Permanently |
| Chart of accounts | Permanently |
| Checks (cancelled but see exception below) | 7 years |
| Checks (cancelled for important payments, i.e., taxes, purchase of property, special contracts, etc. Checks should be filed with the papers pertaining to the underlying transaction) | Permanently |
| Construction documents | Permanently |
| Contracts and leases (expired) | 7 years |
| Correspondence (routine) with customers or vendors | 1 year |
| Correspondence (general) | 3 years |
| Correspondence (legal, tax, and other important matters only) | Permanently |
| Deeds, mortgages, and bills of sale | Permanently |
| Duplicate deposit slips | 1 year |
| EFT documents | 7 years |
| Employee personnel records (after termination) | 7 years |
| Employee applications | 3 years |
| Expense analyses and expense distribution schedules | 7 years |
| Financial statements (end-of-year, other months optional) | Permanently |
| I-9’s (after termination)_ | 1 year |
| Insurance policies (expired) | 3 years |
| Insurance records, current accident reports, claims, policies, etc. | Permanently |
| Internal audit reports (in some situations, longer retention periods may be desirable) | 3 years |
| Internal reports (miscellaneous) | 3 years |
| Inventories of products, materials, and supplies | 7 years |
| Invoices to customers | 7 years |
| Invoices from vendors | 7 years |
| Journals | Permanently |
| Ledgers (and end-of-year trial balances) | Permanently |
| Minute books of directors and stockholders, including by-laws and charter | Permanently |
| Notes receivable ledgers and schedules | 7 years |
| Option records (expired) | 7 years |
| Payroll records and summaries, including payments to pensioners | 7 years |
| Petty cash vouchers | 3 years |
| Physical inventory tags | 3 years |
| Plant cost ledgers | 7 years |
| Property appraisals by outside appraisers | Permanently |
| Property records (including costs, depreciation reserves, end-of-year trial balances, depreciation schedules, blueprints and plans) | Permanently |
| Purchase orders (except purchasing department copy) | 1 year |
| Purchase orders (purchasing department copy) | 7 years |
| Receiving sheets | 1 year |
| Requisitions | 1 year |
| Sales records | 7 years |
| Savings bond registration records of employees | 3 years |
| Scrap and salvage records (inventories, sales, etc.) | 7 years |
| Stenographer’s notebooks | 1 year |
| Stock and bond certificates (cancelled) | 7 years |
| Stock, bond, and other investment records (after disposition) | 7 years |
| Stockroom withdrawal forms | 1 year |
| Subsidiary ledgers | 7 years |
| Tax returns and worksheets, revenue agents’ reports, and other documents relating to determination of income tax liability | Permanently |
| Time books | 7 years |
| Trademark registrations | Permanently |
| Voucher register and schedules | 7 years |
| Vouchers for payment to vendors, employees, etc. (included allowances and reimbursements to employees, officers, etc., for travel and entertainment expenses) | 7 years |
| Individual tax returns and worksheets, revenue agents’ reports, and other documents relating to determination of tax liability. | Permanently |
| Individual tax return supporting documents (See also: bank statements, checks, contracts, correspondence, deeds, depreciation schedules, duplicate deposit slips, property records, stock and other investments above) | 3 years |
Rather than saving the hardcopies of the documents listed above, some may choose to scan the documents and store them electronically on an encrypted flash drive, external hard drive, or a remote back-up service. In the eyes of the IRS, digital document copies are just as good as the originals. However, any paperwork with an original signature or notary seal, like a will or contract, should never be thrown away, even if a back-up digital copy is made. Please note: The retention requirements for electronic records are the same as for paper records.
Although the document retention schedule we’ve outlined above is not all-inclusive, it should be of some assistance as you determine which tax and financial records you need keep, and for how long. Please note that this is only a guide; an individual record retention program should be adapted to fit your particular needs. Also, various regulations and statutory requirements unique to your particular business and/or personal situation should be considered and legal counsel consulted before a retention program is put into effect.
As always, HBE Becker Love LLP’s team of trusted advisors is here to help. For more assistance or to discuss questions you may have related to individual or business document retention, please contact our office (402) 423-4343.