Filed under Running Your Business
Ask About Record Retention
by Buried in Burbank | May 25, 2012
Subject :Record Retention
Dear Toolkit,
My office is drowning in paper. File cabinets have long since overflowed. Every cubbyhole is crammed full of documents of every description. No horizontal surface is visible. How long do I have to hang on to all this stuff anyway?
Thanks,
Buried in Burbank
Dear Buried,
So your office looks like a landfill—and you're worried that the Army Corps of Engineers will soon be dispatched to eliminate this threat to public health and safety? Never fear, we will save you from the wrath of the EPA.
The age-old dilemma of record retention requirements hasn't gotten any easier, even with the advent of electronic storage possibilities. Even if you religiously keep as many of your business records as possible on your computer and diligently back those records up regularly, you'll still need to retain a great deal of hard copy records for varying periods of time. The secret to minimizing the sheer bulk of this necessary evil is to know when it's safe to throw stuff out.
There is no single statute of limitations for the many categories of records a business needs to hang on to for awhile. The federal and state governments don't always agree and the rules seem to change from year to year. Requirements also vary widely depending on what specific industry you're in. So much for adopting a scientific remedy.
The art of effective record retention boils down to two standards: reason and risk. Some business owners fear risking adverse consequences and hang on to everything forever, an unreasonable behavior resulting in landfills such as yours. Others trash everything early and often, an unreasonably risky path to neatness.
To guide you in minimizing your risks, here's a list of generally accepted, reasonable time periods recommended for retaining business records which you may print out for future reference:
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 |
Indefinitely |
Bank reconciliations |
1 year |
Bank statements |
7 years |
Cash books |
Indefinitely |
Charts of accounts |
Indefinitely |
Checks (canceled, see exceptions below) |
7 years |
Checks (canceled for important payments, i.e., taxes, purchases of property, special contracts, etc.) |
Indefinitely |
Construction documents |
Indefinitely |
Contracts and leases (expired) |
7 years |
Contracts and leases still in effect |
Expiration + 7 years |
Correspondence (general) |
3 years |
Correspondence (important) |
Indefinitely |
Deeds, mortgages, bills of sale, titles |
Indefinitely |
Depreciation schedules |
Indefinitely |
Duplicate deposit slips |
1 year |
Electronic fund transfer documents |
7 years |
Employee personnel records (after termination) |
7 years |
Employment applications |
3 years |
Expense analyses and expense distribution schedules |
7 years |
Financial statements (end-of-year, other months optional) |
Indefinitely |
General and private ledgers (and end-of-year trial balance) |
Indefinitely |
I-9s (after termination) |
3 yrs after hire or 1 year after termination, whichever is later |
Insurance policies (expired) |
3 years |
Inventories of products, materials, supplies |
7 years |
Invoices to customers |
7 years |
Invoices from vendors |
7 years |
Journals |
Indefinitely |
Leases |
see Contracts |
Licenses |
Indefinitely |
Loan documents, notes |
Indefinitely |
Minute books of directors and stockholders, including by-laws and charter |
Indefinitely |
Notes receivable ledgers and schedules |
7 years |
OSHA logs |
5 years |
Payroll records and summaries, pensions, payroll taxes |
7 years |
Petty cash vouchers |
3 years |
Property appraisals by outside appraisers |
Indefinitely |
Property records including costs, depreciation reserves, end-of-year trial balances, depreciation schedules, blueprints and plans |
Indefinitely |
Purchase orders (purchasing department copy) |
7 years |
Receiving sheets |
1 year |
Sales records |
7 years |
Scrap and salvage records (inventories, sales, etc.) |
7 years |
Subsidiary ledgers |
7 years |
Tax returns and worksheets, agents' reports, any documents relating to income tax liability |
Indefinitely |
Time books/cards |
7 years |
Trade mark registrations |
Indefinitely |
Voucher register and schedules |
7 years |
Vouchers for payments to vendors, employees, etc. (including allowances and reimbursement of employees officers, etc., for travel and entertainment expenses) |
7 years |
W-4 forms |
4 years |
Workers' comp. documents |
11 years |
Remember that these are just guidelines. Apply them reasonably to minimize the risks in your individual circumstances.