How Long Should You Retain Business Records?

Today, more than ever, business owners suffer from document overload. The two questions we hear over and over are: "Which records should I keep?" and Which records can I destroy?"

A well-defined program is an important part of your record keeping system. Factors to consider when establishing a record retention program include federal and state tax laws, labor laws, government regulations, statutes of limitation on litigation that may affect your business and the general information retrieval needs of your business.

We have prepared these guidelines to assist you in developing your record retention program. Should a question arise about whether important records or documents can be destroyed, please contact us.

EXPLANATIONS - The periods listed in this guide are the recommended minimums. IRS audits are usually initiated within three years after the filing date of income tax returns. However, they are entitled to audit a return within seven years when negligence is involved, and indefinitely in cases of fraud.

If possible be conservative. There is a risk any time you throw away a business record.

Be sure to shred any and all-financial documents for security.

One Year

• Purchase orders (except purchasing department copy)
• Personnel employment applications
• Stenographers' notebooks
• Stockroom withdrawal forms

Three Years

• Bank reconciliation's
• General correspondence
• Duplicate deposit slips
• Employment applications (not hired)
• Expired insurance policies
• Internal audit reports and working papers
• Miscellaneous internal reports
• Petty cash vouchers
• Physical inventory tags
• Receiving sheets

Seven Years

• Accident reports and claims for settled cases
• Accounts payable ledgers (computer runs)
• Accounts receivable ledgers (computer runs)
• Automobile logs
• Bank statements
• Benefits (after expired)
• Bills of lading
• Cash books
• Cash Register Tapes
• Canceled checks (see exception under "Permanently")
• Commission records
• Correspondence with customers
• Expired contracts and leases
• Employee personnel records after termination
• Expense reports
• General journals
• Information returns
• Inventory records
• Investments (after disposal)
• Invoices to customers and from vendors
• Notes receivable ledgers (computer runs)
• Notes payable ledgers (computer runs)
• Payroll tax returns
• Purchase orders
• Sales tax returns
• Time cards

Permanent

• Articles of incorporation and bylaws
• Capital stock and bond records (ledgers, transfer registers, etc.) -- retain with related papers
• Legal and other important correspondence
• Deeds and mortgages
• Copyright and trademarks
• Fixed assets acquisition invoices
• Depreciation schedules
• Employee benefit plan documents and amendments, including accounting records and participants' allocation schedules
• Year end financial statements (other months optional)
• General ledgers
• Licenses and permits
• Minute books - Board of Directors and Stockholders meeting
• Patents
• Property appraisals by outside appraisers
• Property records (costs, blueprints and plans)
• Tax returns and worksheets, revenue agents' reports and other documents relating to determination of tax liability.
• KEEP RELATED CANCEL CHECKS TO ABOVE ITEMS!

C. David Pitzer, CPA, PC
118 Two Mile Pike
Goodlettsville, TN 37072
(615) 851-2727
Fax: (615) 851-8711

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