Record Retention Guide for Businesses
In business, good recordkeeping is essential not only for tax reporting purposes but also for the success of the company. Generally, you need to retain records for three years after the filing due date or when you actually filed your tax return, whichever is later. Remember to add six months to this requirement for most state audit time limits. If an error is found that exceeds 25% or more of your obligation, the time limit can be expanded to six years. The guidelines below give retention periods for the most common business records, in a worst case audit scenario. Please call if you’d like assistance with your record retention program.
Accounting Records | Retention Period |
---|---|
Accounts payable | 7 years |
Accounts receivable | 7 years |
Audit reports | Permanent |
Chart of accounts | Permanent |
Depreciation schedules | Life of assets plus 7 years |
Expense records | 7 years |
Financial statements (annual) | Permanent |
Fixed asset purchases | Permanent |
General ledger | Life of business plus 7 years |
Inventory records | 7 years (Permanent for LIFO system) |
Loan payment schedules | 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 |
Cancelled or substitute checks | 7 years (Permanent for real estate purchases) |
Electronic payment records | 7 years |
Corporate Records | Retention Period |
---|---|
Board minutes | Life of company plus 7 years |
Business licenses | Permanent |
Bylaws | 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 | Ownership period plus 7 years |
Contact us for more information.