Record Retention for Business & Personal Records
Date:
Tuesday, March 14, 2017
Record Retention Timelines
for Business & Personal Records
As April and tax filing deadlines approach our minds turn to our financial records. This is the time of year when many of us think about cleaning out our paper records that may include old tax returns, legal or loan documents, etc. But just what can or should we purge? What papers should be stored away in a safety deposit box or another safe disaster proof place.
The following retention periods are suggested for common business and personal documents.
Permanent Records
Both individuals and businesses have “permanent” type documents and information that should be kept indefinitely.
- Annual audited financial statements
- Canceled checks (tax payments, fixed asset purchases, other major items)
- Chart of accounts
- Company minutes
- Corporate stock records
- IRS audit reports
- IRS elections
- Legal documents
- LIFO inventory records
- Property appraisals
- Real estate purchase and sell records
- Retirement and pension records
- Tax returns
- Trademark registrations
- Trust documents
- Vital records (birth, death, marriage, divorce, adoption, etc.)
6 or 7 Year Records
The IRS can go back six years when auditing tax returns. The statute of limitation period starts at the later of the date the return is filed or the original due date. - Bank loans (after payoff)
- Bank statements
- Contracts (after expiration)
- Employee payroll records
- Insurance records
- Leases (after expiration)
- Mortgage and notes receivable (after payoff)
- Accounts payable ledgers
- Accounts receivable ledgers
- Employee time records
- Inventory records (non-LIFO)
- Note receivable ledgers
- Payroll tax records and reports
- Subsidiary ledgers
- General ledgers and journals
- Workpapers for tax returns
- Depreciation schedules (three years after life of asset)
- Property records, builder contracts, improvement receipts (on property sold)
3 Year Records
Three year records are detailed in nature supporting tax returns and other business matters.
- Auto mileage books
- Bank deposit slips
- Bank reconciliations
- Budgets
- Cancelled checks
- Charitable acknowledgements
- Credit card statements
- Entertainment records
- Expense reports
- Expired insurance policies
- Interim financial statements
- Medical bills
- Petty cash vouchers
- Sales invoices
- Vendor invoices
- Employee personnel records (three years after termination)
Unclassifiable
Certain documents and unusual circumstances may dictate longer or judgmental retention periods.In some special circumstances it may be necessary to consult an attorney or accountant.
- Car records (keep until car sold)
- Credit card receipts (keep until reconciled on statement)
- ATM and deposit slips (keep until reconciled on statement)
- Insurance policies (keep for life of policy)
- Pay stubs (keep until reconciled with W-2)
- Sales receipts (keep for life of warranty or life of item on large purchases)
- Warranties and instructions (keep for life of product)
- Other bills (keep until payment verified on next statement)
Record management is an important matter for business owners. Organization, regimented procedures and proper policies on record retention and destruction can reduce the liability risk associated with record management and ease the annual task of purging the next year’s aged files.
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