Thou shalt not sort thy papers!
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- How long should you keep your documents?
- Preservation of Official Documents
- Did You Know?
- Digital Documents’ Specificities
How long should you keep your documents?
The time documents should be kept depends on appropriate laws, IRS and governmental regulations, and third-party requirements.
Below is a list of the primary documents that companies should preserve.
Of course, the list of the company’s strategic documents is not managed by the law: your company has an interest to not only preserve all the accumulated documentation, but also to be able to quickly relocate the specific document for which you are searching.
To manage such a great amount of data, computer tools are the most efficient. Why not start with a Xambox?
COMPANY DOCUMENTS
General Financial Records
| Type of Record | Retention Period |
|---|---|
| Auditors’ reports | Permanent |
| Bank debt deduction | 7 years |
| Bank deposit slips, reconciliations, statements | 4 years |
| Bills of lading | 4 years |
| Budgets | 2 years |
| Checks - cancelled | 4 years |
| Contracts - purchase and sales | 4 years* |
| Credit memos | 4 years |
| Depreciation records | 4 years* |
| Employee expense reports | 4 years |
| Employee payroll records (W-2, W-4, annual earnings records, etc.) | 6 years* |
| Financial statements — annual | Permanent |
| Financial statements — interim | 4 years |
| Freight bills | 4 years |
| Internal reports (Work orders, sales reports, production reports) | 4 years |
| Inventory lists | 4 years |
| Invoices - Sales and cash register receipts, merchandise purchases | 4 years |
| Invoices — purchases (permanent assets) | 4 years* |
| General ledger | Permanent |
| Journals | |
| General, cash receipts, cash disbursement, and purchase journals. | Permanent |
| Payroll journal | 4 years |
| Petty cash vouchers | 4 years |
| Subsidiary ledgers (accounts receivable, accounts payable, etc.) | 6 years |
| Time cards and daily time reports | 4 years |
| Worthless securities | 7 years |
* Retention periods begin after termination, expiration, disposal, etc. of item.
Business Records
| Type of Record | Retention Period |
|---|---|
| Articles of incorporation | Permanent |
| Bylaws | Permanent |
| Capital stock and bond records | Permanent |
| Contracts and agreements (government construction, partnership, employment, labor, etc.) | Permanent |
| Copyrights and trademark registration | Permanent |
| Legal correspondence | Permanent |
| Minutes | Permanent |
| Mortgages and note agreements | 6 years* |
| Patents | Permanent |
| Personnel files | 4 years* |
* Retention periods begin after termination, expiration, disposal, etc. of item.
Insurance Records
| Type of Record | Retention Period |
|---|---|
| Accident reports | 6 years |
| Fire inspection reports | 6 years |
| Group disability records | 6 years |
| Insurance policies | 6 years* |
| Safety records | 6 years |
| Settled insurance claims | 4 years* |
* Retention periods begin after termination, expiration, disposal, etc. of item.
Pension/Profit Sharing Records
| Type of Record | Retention Period |
|---|---|
| Actuarial reports | Permanent |
| Associated ledgers and journals | Permanent |
| Financial statements | Permanent |
| IRS approval letter | Permanent |
| Plan and trust agreement | Permanent |
* Retention periods begin after termination, expiration, disposal, etc. of item.
Tax Records
There is no limit for returns that are filed fraudulently or that substantially underreport income.
| Type of Record | Retention Period |
|---|---|
| Tax returns and cancelled checks (federal, state and local) | Permanent |
| Sales and use tax returns | Permanent |
| Payroll tax returns | 4 years |
| Pension/profit-sharing informational returns | Permanent |
| All retention periods begin with the date the return was filed. If the statute of limitations concerning a tax year is extended, the retention period should be extended accordingly. | |
| IRS Information Additional information on records you should keep and the Federal government’s requirements for retention are on line at the Internal Revenue Service’s site: Record Keeping for Individuals, Record Keeping for Businesses. | |
Source: Sterck Kulik O’Neill Accounting group, inc.
PERSONAL DOCUMENTS
Financial records timeline
| Type of record | Length of time to keep and why |
|---|---|
TaxesReturns
| Seven years
The IRS has three years from your filing date to audit your return if it suspects good faith errors. The three-year deadline also applies if you discover a mistake in your return and decide to file an amended return to claim a refund. The IRS has six years to challenge your return if it thinks you underreported your gross income by 25 percent or more. There is no time limit if you failed to file your return or filed a fraudulent return. |
IRA contributions | Permanently
If you made a nondeductible contribution to an IRA, keep the records indefinitely to prove that you already paid tax on this money when the time comes to withdraw. |
Retirement/savings plan statements | From one year to permanently |
Bank records | From one year to permanently |
Brokerage statements | Until you sell the securities
You need the purchase/sales slips from your brokerage or mutual fund to prove whether you have capital gains or losses at tax time. |
Bills | From one year to permanently
Bills for big purchases — such as jewelry, rugs, appliances, antiques, cars, collectibles, furniture, computers, etc. — should be kept for proof of their value in the event of loss or damage. |
Credit card receipts and statements | From 45 days to seven years
Keep the statements for seven years if tax-related expenses are documented. |
Paycheck stubs | One year |
House/condominium records | From six years to permanently
Keep all records documenting the purchase price and the cost of all permanent improvements — such as remodeling, additions and installations. Keep records of expenses incurred in selling and buying the property, such as legal fees and your real estate agent’s commission, for six years after you sell your home. Holding on to these records is important because any improvements you make on your house, as well as expenses in selling it, are added to the original purchase price or cost basis. This adds up to a greater profit (also known as capital gains) when you sell your house. Therefore, you lower your capital gains tax. |
Source: Marquette National Bank and Catherine Williams, President of Consumer Credit Counseling Services of Greater Chicago
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