|
| | 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
|
|
|
|
|
|
