Retention Guide

Question: How long should you keep your records?

Answer: As long as you might need them to support inquiries by tax authorities, insurance companies, creditors, or other interested parties.

Federal law requires you to maintain all of your records for at least three (3) full years after the close of a tax year. That time frame extends for any of the following circumstances:

  • If you did not report income and it amounts to 25% or more of your gross income, then you need to keep your records for a full six (6) years after the close of the tax year.
  • If you filed a claim for a credit or refund or a prior tax year, then you need to keep your records for three (3) years from the date you filed the original return or two (2) years from the date of the amended return, whichever is later.
  • If you file a claim for a loss for a worthless security or bad debt deduction, then you need to keep your records for a full seven (7) years.
  • If you did not file a return or you filed a fraudulent return, then you need to keep your records indefinitely.
  • Finally, you need to keep all employment records for at least four (4) years after taxes become due or are paid, whichever is later.

It’s not enough to keep copies of your tax filings. You need to maintain an orderly file of all of the supporting documentation to justify the numbers you report.

Based on industry best practices, here are our recommendations for record retention:

Accident reports/claims (settled cases) - 7 years

Accounts payable ledgers and schedules - 7 years

Accounts receivable ledgers and schedules - 7 years

Audit reports - Permanently

Bank reconciliations - 3 years

Bank statements - 7 years

Chart of accounts - Permanently

Cancelled checks• General - • 7 years

• Important payments - • Permanently

Contracts, mortgages, notes, and leases• Expired - • 7 years

• Still in effect - • Permanently

Corporate documents (incorporation, charter, by-laws, etc.) - Permanently

Correspondence• General - • 3 years

• Legal and important matters - • Permanently

• Routine with customers and/or vendors - • 2 years

Deeds, mortgages, and bills of sale - Permanently

Depreciation schedules - Permanently

Duplicate deposit slips - 3 years

Employment applications - 3 years

Employment tax records - 7 years

Expense analyses/expense distribution schedule - 7 years

Financial statements:• Year-end - • Permanently

• Other - • Optional

Garnishments - 7 years

General ledgers/year-end trial balance - Permanently

Insurance policies (expired) - 3 years

Insurance records (policies, claims, etc.) - Permanently

Internal audit reports - 3 years

Internal reports - 3 years

Inventories of products, materials, and supplies - 7 years

Invoices to customers or from vendors) - 7 years

Journals - Permanently

Minutes from board and stockholder meetings - Permanently

Notes receivable ledgers and schedules - 7 years

Payroll records and summaries (including payments to pensioners) - 7 years

Personnel records (terminated) - 7 years

Petty cash vouchers - 3 years

Physical inventory tags - 3 years

Plant cost ledgers - 7 years

Property records (including depreciation schedules) - Permanently

Purchase orders• Purchasing department copy - • 7 years

• Other copies - • 1 year

Receiving sheets - 1 year

Retirement and pension records - Permanently

Requisitions - 1 year

Sales records - 7 years

Stenographer’s Notebooks - 1 year

Stockroom Withdrawal Forms - 1 year

Subsidiary ledgers - 7 years

Tax returns and worksheets, examination reports, and other documents related to determination of income tax liability - Permanently

Timesheets - 7 years

Trademark registrations and copyrights - Permanently

Travel and entertainment records - 7 years

Voucher register and schedules - 7 years

Withholding tax statements - 7 years

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