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 the suggested document retention time length:
1 Year
Correspondence with Customers and VendorsDuplicate 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
Document retention is a crucial aspect of maintaining organized and compliant business records. While the length of time for keeping different types of documents varies, it is essential to establish an efficient system for secure data storage. One effective solution is utilizing a secure virtual data room. This solution provides a secure and organized environment for storing important business records, offering peace of mind and compliance with document retention requirements.
* 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