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Document Retention Series: What’s The Proper Length Of Time To Store Documents?

    
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The amount of time to keep records differs by type. Some documents and records need to be kept for only a year or a couple of years, while others need to be kept throughout the life of the business. Document retention is very important, but what is the proper length of time to store documents?

Records related to the incorporation of the business should be kept for as long as the business is in operation. Any legal records, such as licenses, patents, registration forms and tax ID forms should also be kept throughout the business’ life.

Tax records have to be kept for a minimum of three years, however, these records may come in handy to your business in the long run so it does not hurt to hold on to them indefinitely. You can safely shred general correspondence, inventory logs and expired insurance policies after three years.

Some records should be kept for seven years. These include bank statements, personnel records for terminated employees and purchase orders.

 Here is a list of the different types of documents and what the suggested document retention time length:

DOCUMENT RETENTION BY YEARS:

1 YEAR

Correspondence with Customers and Vendors
-Duplicate Deposit Slips
-Purchase Orders (other than Purchasing Department copy)
-Receiving Sheets
-Requisitions
-Stenographer’s Notebooks
-Stockroom Withdrawal Forms

3 YEARS

-Employee Personnel Records (after termination)
-Employment Applications
-Expired Insurance Policies
-General Correspondence
-Internal Audit Reports
-Internal Reports
-Petty Cash Vouchers
-Physical Inventory Tags
-Savings Bond Registration Records of Employees
-Time Cards For Hourly Employees

7 YEARS

-Accident Reports, Claims
-Accounts Payable Ledgers and Schedules
-Accounts Receivable Ledgers and Schedules
-Bank Statements and Reconciliations
-Cancelled Checks
-Cancelled Stock and Bond Certificates
-Employment Tax Records
-Expense Analysis and Expense Distribution Schedules
-Expired Contracts, Leases
-Expired Option Records
-Inventories of Products, Materials, Supplies
-Invoices to Customers
-Notes Receivable Ledgers, Schedules
-Payroll Records and Summaries, including payment to pensioners
-Plant Cost Ledgers
-Purchasing Department Copies of Purchase Orders
-Sales Records
-Subsidiary Ledgers
-Time Books
-Travel and Entertainment Records
-Vouchers for Payments to Vendors, Employees, etc.
-Voucher Register, Schedules

FOREVER

-Audit Reports from CPAs/Accountants
-Cancelled Checks for Important Payments (especially tax payments)
-Cash Books, Charts of Accounts
-Contracts, Leases Currently in Effect
-Corporate Documents (incorporation, charter, by-laws, etc.)
-Documents substantiating fixed asset additions
-Deeds
-Depreciation Schedules
-Financial Statements (Year End)
-General and Private Ledgers, Year End Trial Balances
-Insurance Records, Current Accident Reports, Claims, Policies
-Investment Trade Confirmations
-IRS Revenue Agents. Reports
-Journals
-Legal Records, Correspondence and Other Important Matters
-Minutes Books of Directors and Stockholders
-Mortgages, Bills of Sale
-Property Appraisals by Outside Appraisers
-Property Records
-Retirement and Pension Records
-Tax Returns and Worksheets*
-Trademark and Patent Registrations

* Tax records are not required to be kept forever, but situations may arise in the future where the documents could come in handy. 

References:
Bankrate.com: What Financial Records to Keep and How Long to Keep Them

Continue to Document Retention Series (Part 3): The Consequences Of Failing To Keep Accurate Records

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