Document Retention: How Long is Long Enough?

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.

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