Articles

Record Retention Guidelines for Businesses

wesley-tingey-snNHKZ-mGfE-unsplash

Whether you are a seasoned or a new business owner, you have certainly learned one certainty: There is a lot of paperwork. Since running a successful business is a monumental accomplishment, the paperwork seems like a necessary evil. It is very tempting to throw away many of those papers and files that have taken up so much room for so long. On the other hand, it’s tempting to place every last piece of paper and every receipt into a box and save it for eternity. However tempting that may be, there are some papers you do need to keep, and some you need to destroy, and for varying amounts of time. In other words; it’s complicated.

This can be a very confusing task to go through, and you, like many other businesses, are probably thinking you should keep everything just in case. That can create overcrowding in your file cabinets of unnecessary and possibly sensitive information that can get misplaced, lost, or in the wrong hands.

Fortunately, in the modern era, there are companies that can help you store this information digitally. Many legal entities will accept digital copies as originals, although you should check with your attorney and insurance agent to ensure which can be kept digitally and which must remain in paper form.

In addition to giving you your office space back, the benefit of having your paperwork stored digitally is by a company is that it is backed up, secure, and systematically filed in one place so it is fast and easy to pull up the information. That means you get it when you need it.

The goal of this blog is to give you the information you need for retaining business records. There is a table below that gives general guidelines on how long to keep certain types of documents, but, before you skip down there, please take the following into consideration:

  • Please check with your lawyer, accountant, and insurance agent annually to see what they recommend.
  • It’s always good practice to keep your records for one and only one year longer than recommended.
  • Remember to destroy old records – shred paper; delete digital.
  • Make sure your records are filed and retrievable. According to an article in RecordsNation.com, Morgan Stanley was fined $13 million in 2017 for inadequate record-keeping, among other things. (https://www.recordnations.com/2017/05/managing-record-retention-guidelines/) Whether digital or paper, have a good filing system.

Now that you have the basics down about what to keep and what to destroy – not throw away – destroy – in terms of records, here is a hand chart, put together by Grossman St. Amour, CPAs, PLLC.

BUSINESS ACCOUNTING RECORDS

Accounts payable 7 years
Accounts receivable 7 years
Audit reports Permanent
Chart of accounts Permanent
Depreciation schedules Permanent
Expense records 7 years
Financial statements (annual Permanent
Fixed asset purchases Permanent
General ledger Permanent
Inventory records 7 years (permanent for LIFO system)
Loan payment schedules 7 years
Purchase orders 7 years
Sales records 7 years
Tax returns Permanent

BUSINESS BANK RECORDS

Bank reconciliations 2 years
Bank statements 2 years
Cancelled checks 7 years (permanent for real estate)
Electronic payment records 7 years

 

 

BUSINESS CORPORATE RECORDS

Board minutes Permanent
Bank statements Permanent
Business licenses Permanent
Bylaws Permanent
Contracts – major Permanent
Contracts – minor Life + 4 years
Insurance policies Life + 3 years (verify with agent)
Leases Permanent
Mortgages Permanent
Patents Permanent
Shareholder records Permanent
Stock registers Permanent
Stock transactions Permanent
Trademarks Permanent

BUSINESS EMPLOYEE RECORDS

Benefit plans Permanent
Employee files (former employees) 7 years or state statute for lawsuit
Employment applications 3 years
Employment taxes 7 years
Payroll records 7 years

 

 

BUSINESS REAL PROPERTY RECORDS

Construction records Permanent
Lease payment records Life + 4 years
Leasehold improvements Permanent
Real estate purchases Permanent

 

 

INDIVIDUAL RECORDS

Divorce documents Permanent
Estate planning documents Permanent
Home improvement receipts Ownership period + 7 years
Home purchase documents Ownership period + 7 years
Income tax returns and all supporting documents 7 years
Insurance policies Life of policy + 3 years
Loan documents Term of loan + 7 years
Retirement plan annual reports Permanent

 

Record Retention Times

To get you started, here are some basic guidelines for the length to maintain your records. Laws vary by state so you should have your attorney review your program once it is completed. (Table from Records Nation https://www.recordnations.com/articles/business-records-retention/).

Business Records Retention Times
Type of Record Retention Period (Years)
Articles of incorporation Permanent
Bylaws Permanent
Capital stock and bond records Permanent
Contracts & agreements (government construction, partnership, employment, labor) Permanent
Legal correspondence Permanent
Minutes Permanent

 

 

Financial Records Retention Times

Type of Record Retention Period (Years)
Auditors’ reports Permanent
Bank debt deduction 7
Bank deposit slips, reconciliations, statements 4
Bills of lading 4
Budgets 2
Checks – cancelled 4
Contracts – purchase and sales 4*
Credit memos 4
Depreciation records 4*
Employee expense reports 4
Employee payroll records (W-2, W-4, annual earnings records, etc.) 6*
Financial statements — annual Permanent
Financial statements — interim 4
Freight bills 4
Internal reports (Work orders, sales reports, production reports) 4
Inventory lists 4
Invoices – Sales and cash register receipts, merchandise purchases 4
Invoices — purchases (permanent assets) 4*
General ledger Permanent
General, cash receipts, cash disbursement, and purchase journals. Permanent
Payroll journal 4
Petty cash vouchers 4
Subsidiary ledgers (accounts receivable, accounts payable, etc.) 6
Time cards and daily time reports 4
Worthless securities 7

 

 

Personnel Records Retention Times

Type of Record Retention Period (Years)
Personnel Accident Report/Injury Claim 11
Attendance Records 4
COBRA Records 3
Employee Benefit Plans 2*
I-9 Forms 1*
Medical and Exposure Records – related to toxic substances 40
OSHA Training Documentation 3
OSHA Logs 6
Patents Permanent
Personnel files 6*
* Retention periods begin after termination,

 

 

Inventions and Copyrights Retention Times

Type of Record Retention Period (Years)
Patents Permanent
Copyrights Permanent
Trademarks Permanent
Servicemarks Permanent

 

Insurance Records Retention Times
Type of Record Retention Period (Years)
Accident reports 6
Fire inspection reports 6
Group disability records 6
Insurance policies 6 *
Safety records 6
Settled insurance claims 4 *
* Retention periods begin after termination, expiration, disposal, etc. of item.

 

 

Real Estate Records Retention Times

Type of Record Retention Period (Years)
Mortgages 6 years
Contracts 6 years
Deeds Permanent

 

 

Pension/Profit Sharing Records Retention Times

Type of Record Retention Period (Years)
Actuarial reports Permanent
Associated ledgers and journals Permanent
Financial statements Permanent
IRS approval letter Permanent
Plan and trust agreement Permanent

 

3SG Plus is a leader in the digital transformation industry. The experts at 3SG Plus provide transformative business solutions that streamline operations, reduce cost, and help organizations of all sizes across many verticals meet their strategic goals and revenue objectives. 3SG Plus innovative solutions enable businesses to create opportunities for growth, enhance security, reduce liability, and improve overall outcomes for employees and customers alike.

Share this post
Share on facebook
Share on twitter
Share on linkedin
Share on pinterest
Share on print
Share on email
Share on google

Related Posts

Favorites
Favorites

This is the heading

Lorem ipsum dolor sit amet consectetur adipiscing elit dolor

Capabilities Overview

Fill in the information below and we will send over our capabilities PDF.

Support Ticket

Fill Out The Fields Below

Please feel free to call us during normal business hours.

614.839.0250