Keep It or Toss It? A 'General' Records Retention Guideline

There are many good reasons to have a plan in place for keeping track of important papers, especially ones that pertain to your business. When the time comes to do the yearly "file purge", for many of us, it can be a daunting and scary task.  The consequences of tossing out important documents can be harsh. Here are some general record retention guidelines to help you develop your own retention timeline policy.

Records To Keep Indefinitely:

  • Cancelled checks for important payments, such as taxes and purchases of property
  • Income tax returns
  • Contracts (leases currently in effect)
  • Deeds
  • Property records
  • Retirement and pension records
  • Audit reports, internal and external
  • Stock records
  • Financial statements, year-end
  • Investment trade confirmations and statements
  • Mortgages, title papers, bills of sale
  • Legal records
  • Licenses / patents / trademarks
  • Chart of accounts
  • Partnership agreements
  • Property appraisal prepared by outside appraisers
  • Insurance records, current accident reports, claims and policies
  • Corporate documents (including articles of incorporation, bylaws and charter, minute book of directors and stockholders, etc)
  • Tax returns, worksheets and payment checks

Records To Keep For 7 Years:

  • Accident reports and claims
  • Budgets
  • Contracts and leases that have expired
  • Insurance policies that have expired
  • Settled accident claims
  • Payroll records and summaries (including payment to pensioners)
  • Employment tax records
  • Bank statements and reconciliation reports
  • Cancelled stock and bond certificates
  • Deposit slips
  • Time books
  • Subsidiary ledgers
  • Vendor invoices
  • Personnel records of terminated employees
  • Accounts payable ledgers and schedules
  • Sales records
  • Inventories of products, materials and supplies
  • Customer invoices
  • Travel and entertainment records
  • Utility records (if tax related)

Records To Keep For 3 Years:

  • Bank deposit slips
  • Cancelled checks
  • Employment records (after termination)
  • Employment applications (for applicants not hired)
  • Investments in limited partnerships or passive activities
  • Expense reports
  • Petty cash vouchers
  • Tip reporting and tip substantiation documents
  • Credit card statements
  • Requisition orders
  • Time cards for hourly employees
  • Purchase orders and receiving sheets

Records To Keep For 1 Year:

  • Receiving Sheets
  • Duplicate deposit slips

Developing a records retention plan will ensure that your business keeps the records it needs for operational, legal and fiscal reasons, and destroys the documents when they're no longer of any use. You may base your records retention plan on your own experience and research of legal mandates or on what other companies are doing.

It is very important to inventory your records and draw up a company retention plan. You have to know what you have and how long to keep it, legally and for your own business purposes, before you can establish an efficient system.

There is no one-size-fits all records retention policy, but a complete retention policy should contain the purpose of the policy; detailed guidelines for retention time frame of documents; the individuals who are responsible for the oversight and execution of the policy; procedures for the storage, organization, retrieval and final destruction of the documents, as well as exceptions to the policy for litigation or audit purposes.

Remember there are no universal rules and regulations for records retention and the above is merely a guideline. Requirements may vary state to state and industry to industry so be sure to check applicable regulations and sources before implementing a records retention policy.