Overview
We are often asked about how long specific records should be kept. Discarding records that should be kept
poses a wide range of potential tax and legal problems. Keeping reports too long wastes precious space and
resources. But how long should the company’s files be kept? The answer varies depending on company policies
and the type of files. Generally, the files should be kept as long as they serve a useful purpose or until all
legal and regulatory requirements are met.
Businesses often base how long they keep files on the length of the statute of limitations for breach of
contract, breach of fiduciary duty, and professional liability claims. The statues, of course vary with each
state.
As to your tax records, the statute of limitations period for income tax returns is generally three years. It
is six years if there is a substantial understatement of gross income. A good rule to thumb is to add a year
to the statute of limitations period. Using this approach, taxpayers should keep most of their income tax
records a minimum of four years, but it may be more prudent to retain them for seven years. Regardless of the
tax assessment periods, taxpayers should retain certain records for longer periods, and in some cases,
indefinitely. Tax return, results of an audit by a tax authority, general ledgers, and financial statements
should normally be kept indefinitely.
Sample record retention periods are included herein. Please note that this table should only be used as a
guide. You should consult with your attorney and insurance carrier when establishing a record retention
policy. It is also recommended reviewing your record retention policy annually and updating it as necessary
considering changes in governmental and professional requirements and the cost of retaining records.
It is also important to note that the IRS permits taxpayers to store certain tax documents electronically.
Although these IRS rules are aimed primarily as businesses and sole proprietors, they presumably apply to
individuals as well. These rules permit taxpayers to convert paper documents to electronic images and maintain
only the electronic files. The paper document can then be destroyed. Certain requirements must be met to take
advantage of an electronic storage system.
BUSINESS – GENERAL RECORDS RETENTION
|
TYPE OF RECORD
|
TIME PERIOD TO RETAIN
|
|---|
ACCOUNTING RECORDS
|
|
Auditors’ report/Annual financial statements
|
Permanently
|
|
Bank statements and deposit slips
|
7 years
|
|
Cancelled checks:
|
|
-
Fixed assets
-
Taxes (payroll related)
-
Taxes (income)
-
General
-
Payroll
| -
Permanently
-
7 years
-
Permanently
-
7 years
-
7 years
|
|
Cash disbursements
|
Permanently
|
|
Cash receipts journal
|
Permanently
|
|
Chart of accounts
|
Permanently
|
|
Deeds, mortgages, bills of sale
|
Permanently
|
|
Electronic payment records
|
7 years
|
|
Employee expenses reports
|
7 years
|
|
Fixed asset record (invoices, cancelled checks,
Depreciation schedules)
|
Permanently
|
|
Freight bills and bills of lading
|
7 years
|
|
General journal
|
Permanently
|
|
General ledger
|
Permanently
|
|
Inventory listings and tags
|
7 years
|
|
Invoices: sales to customers/credit memos
|
7 years
|
|
Patent/trademark and related papers
|
Permanently
|
|
Payroll journal
|
7 years
|
|
Production and sales reports
|
7 years
|
|
Purchases
|
7 years
|
|
Purchase journal
|
Permanently
|
|
Purchase orders
|
7 years
|
|
Sales or work orders
|
7 years
|
|
Subsidiary ledgers (accounts receivable, accounts payable, equipment)
|
7 years
|
|
Time cards and daily time reports
|
7 years
|
|
Training manuals
|
Permanently
|
|
Trial balance – year end
|
Permanently
|
|
TYPE OF RECORD
|
TIME PERIOD TO RETAIN
|
|---|
EMPLOYEE BENEFIT PLAN RECORDS
|
|
Actuarial reports
|
Permanently
|
|
Allocation and compliance testing
|
7 years
|
|
Brokerage/Trustee statements supporting 7 years
investments
|
7 years
|
|
Financial statements
|
Permanently
|
|
General ledger and journals
|
Permanently
|
|
Information returns (Form 5500)
|
Permanently
|
|
Internal Revenue Service/Department of Labor Correspondence
|
Permanently
|
|
Participant communications related to distribution,
termination and beneficiaries
|
7 years
|
|
Plan and trust agreements
|
Permanently
|
|
TYPE OF RECORD
|
TIME PERIOD TO RETAIN
|
|---|
INSURANCE RECORDS
|
|
Accident reports and settled claims
|
6 years after settlement
|
|
Fire inspection and safety reports
|
7 years
|
|
Insurance policies (still in effect)
|
Permanently
|
|
Insurance policies (expired)
|
7 years
|
|
TYPE OF RECORD
|
TIME PERIOD TO RETAIN
|
|---|
LEGAL DOCUMENTS
|
|
Articles of Incorporation and Bylaws
|
Permanently
|
|
Buy-sell agreements
|
Permanently
|
|
Contracts and leases (still in effect)
|
Permanently
|
|
Contracts and leases (expired)
|
7 years
|
|
Employment agreements
|
7 years
|
|
Legal correspondence
|
Permanently
|
|
Minutes
|
Permanently
|
|
Partnership agreements
|
Permanently
|
|
Stock certificates and ledgers
|
Permanently
|
|
TYPE OF RECORD
|
TIME PERIOD TO RETAIN
|
|---|
PERSONNEL RECORDS
|
|
Child labor certificates and notices
|
3 years
|
|
Employment application (from date of termination)
|
2 years
|
|
Employment eligibility verification (I-9 Form)
|
3 years
|
|
Help wanted ads and job opening notices
|
2 years
|
|
Personnel files (from date of termination)
|
4 years
|
|
Records of job injuries causing loss of work
|
5 years
|
|
Safety: chemical and toxic exposure records
|
30 years
|
|
Union agreements and individual employee
contracts (from date of termination)
|
3 years
|
|
TYPE OF RECORD
|
TIME PERIOD TO RETAIN
|
|---|
TAX RECORDS
|
|
IRS adjustments
|
Permanently
|
|
Payroll tax returns
|
7 years
|
|
Property basis records
|
Permanently
|
|
Sales and use tax returns
|
Permanently
|
|
Tax return and cancelled checks for tax payments
|
Permanently
|
Please note that these tables should only be used as a guide. It is also recommended reviewing your record
retention policy annually and updating it as necessary considering changes in governmental and professional
requirements and the cost of retaining records.
INDIVIDUAL – GENERAL RECORDS RETENTION
|
TYPE OF RECORD
|
TIME PERIOD TO RETAIN
|
|---|
|
401K /Keogh Statements
|
7 years *
|
|
Alimony, Custody or Prenuptial Agreements
|
Permanently
|
|
Annuity Year End Statements
|
7 years *
|
|
Bank Statements
|
3 years
|
|
Birth and Death Certificates
|
Permanently
|
|
Cancelled Checks
|
3 years
|
|
Certificates of Deposit Statements
|
7 years
|
|
Charitable Contributions
|
Keep with applicable tax return
|
|
Credit Card Purchase Receipts
|
Discard after purchase appears
on credit statement if needed for
warranties, merchandise returns
or taxes.
|
|
Detailed List of Financial Assets Held
|
Permanently
|
|
Employee Business Expense Reports
|
Keep with applicable tax return
|
|
Forms 1099 Received
|
7 years
|
|
Forms W2 Received
|
Permanently
|
|
House Records (cancelled checks for purchase
of major improvements and maintenance
|
Permanently
|
|
Individual Retirement Account Records
|
Permanently
|
|
IRA Statements (deductible & non-deductible)
|
7 years to Permanently
|
|
Insurance Policies – Life
|
Permanently
|
|
Insurance Policies – Other
|
7 years
|
|
Loan Records/Forms 1098
|
7 years *
|
|
Major Purchase Receipts
|
7 years
|
|
Medical Expenses
|
Keep with applicable tax return
|
|
Medical Records
|
Permanently
|
|
Military Records
|
Permanently
|
|
Pay Stubs
|
One year. Discard all but final,
cumulative pay stubs for the year
|
|
Photos or Videotape of Valuables
|
Permanently
|
|
Real Estate Documents
|
Keep 3-6 years after property has
been disposed of and taxes have
been paid.
|
|
Tax return and cancelled checks for tax payments
|
Permanently
|
|
Investment/Sales of Stocks & Bonds
| 7 years |
*7 Years Following Disposition, Termination, or Pay Off
Please note that these tables should only be used as a guide. It is also recommended reviewing your record
retention policy annually and updating it as necessary considering changes in governmental and professional
requirements and the cost of retaining records.
