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Many clients often ask, "How long should records be kept?"

In business, good recordkeeping is essential not only for tax reporting purposes but also for the success of the company. Just how long you should keep records is partly a matter of judgment and a combination of state and federal statues of limitation.  The statute of limitations for federal tax returns is three years after filing, (six years if underreported income is involved, & there is no statute of limitations if they believe fraud is involved.)  Below are some recommended retention periods for various records:

 

Accounting Records

Retention Period

Accounts payable

7 years

Accounts receivable

7 years

Audit reports

Permanent

Chart of accounts

Permanent

Depreciation schedules

Permanent

Expense records

7 years

Financial statements (annual)

Permanent

Fixed asset purchases

Permanent

General ledger

Permanent

Inventory records

7 years
(Permanent for LIFO system)

Loan payment schedules

7 years

Paid invoices

7 years

Purchase orders (1 copy)

7 years

Sales records

7 years

Tax returns

Permanent

Bank Records

Retention Period

Bank reconciliations

2 years

Bank statements

7 years

Credit card receipts

7 years

Cancelled checks

7 years
(Permanent for real estate purchases)

Deposit slips

7 years

Electronic payment records

7 years

Corporate Records

Retention Period

Board minutes

Permanent

Bylaws

Permanent

Business licenses

Permanent

Contracts – major

Permanent

Contracts – minor

Life + 4 years

Insurance policies

Life + 3 years
(Check with your agent. Liability for prior years can vary.)

Leases/mortgages

Permanent

Patents/trademarks

Permanent

Shareholder records

Permanent

Stock registers

Permanent

Stock transactions

Permanent

Employee Records

Retention Period

Benefit plans

Permanent

Employee files (ex-employees)

7 years
(Or statute of limitations for employee lawsuits)

Employment applications

3 years

Employment taxes

7 years

Payroll records

7 years

Pension/profit sharing plans

Permanent

Real Property Records

Retention Period

Construction records

Permanent

Leasehold improvements

Permanent

Lease payment records

Life + 4 years

Real estate purchases

Permanent

Miscellaneous Records

Retention Period

Investment records

Life + 7 years

 

348 Clifton Ave • P.O. Box 166 • Clifton, NJ  07011
Phone: (973) 365-1900 • Fax:  (973) 365-1933
 Monday to Friday 9:00 A.M. to 5 P.M.