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How Long You Should Keep Your Records
The amount of records created by businesses, governments, healthcare and so forth can become overwhelming. You do not want to incur the cost to store documents that you no longer need. That is why it important to have a retention plan as part of a comprehensive Records Management Program. Consistent disposal practices facilitate retention and regulatory compliance and decrease corporate risk when conducted in accordance with an approved records retention schedule.
The following are guidelines for the retention period of different types of records. However, it is important to keep your own business and investment concerns in mind, as well as the advice of legal counsel, when deciding record retention periods. Your retention schedule should be updated every 12 to 18 months to reflect changes in regulations, industry, and business.
RECORDS RETENTION PERIOD
| Accident Reports/ Claims (Settles Cases) | 7 Years | | Accounts Payable Ledgers and Schedules | 7 Years | | Accounts Receivable Ledgers and Schedules | 8 Years | | Audit Reports | Permanently | | Bank Statements | 3 Years | | Capital Stock and Bond Records: | | Ledgers, Transfer Registers, Stubs Showing
Issues, Record of Interest Coupons, Options | Permanently | | Charts of Accounts | Permanently | | Checks (Cancelled checks for important payments, special contracts, purchase of assets, payment of taxes, etc.) Checks should be filed with the papers pertaining to the underlying transaction | Permanently | | Checks (Cancelled except those noted above) | 7 Years | | Contracts and leases (expired) | 7 Years | | Contracts and leases still in effect | Permanently | | Correspondence, general and schedules | 2 Years | | Correspondence, legal and important letters | Permanently | | Correspondence, routine with customers/vendors | 2 Years | | Deeds, mortgages and bills of sale | Permanently | | Depreciation schedules | Permanently | | Employee personal records (after termination) | 7 Years | | Employee Applications | 3 Years | | Financial statements (year-end, other months optional) | Permanently | | General ledgers, year-end trial balances | Permanently | | Insurance records, policies, etc. | Permanently | | Internal audit reports (miscellaneous) | 3 Years | | Inventory records | 7 Years | | Invoices to customers or from vendors | 7 Years | | IRA and Keogh Plan contributors, rollovers, transfers and distribution | Permanently | Loan documents 7 Years after final payment
Minute books of directors, stockholders, bylaws, and charter | Permanently | | Payroll records, summaries and tax returns | 7 Years | | Petty cash vouchers | 3 Years | | Property records, including costs, depreciation reserves, year-end trial balances, depreciation schedules, blueprints, and plans | Permanently | | Purchase orders | 7 Years | | Receiving orders | 1 Year | | Safety records | 6 Years | | Sales records | 7 Years | | Stock and bond certificates (cancelled) | 7 Years | | Subsidiary ledgers | 7 Years | | Tax returns, revenue agents reports, and other documents relating to determination of income tax liability | Permanently | | Time cards and daily reports | 7 Years | | Trademark registrations, patents, and copyrights | Permanently | | Voucher register and schedules | 7 Years | | Vouchers for payments to vendors, employees, etc. (Includes allowances and reimbursements of employees, officers, etc., for travel and entertainment expenses) | 7 Years |
The normal statute of limitations on federal returns is three years. Under some circumstances it is six years, and if you fail to file a return or there is fraud involved, the statute of limitations does not close.
This means that the Internal Revenue Service under nominal conditions would audit your return any time up through three years. Since the statute of limitations in some states exceeds the federal statute, you should tailor your years of retention to the longer of the two statutes.
In deciding your own record retention schedule, consider keeping indefinitely those records which cannot be recreated by any other office, institution or governmental unit.
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Record Storage
