Document Retention

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Document retention is a little talked about subject but nonetheless important.  Everyone has questions on how long to keep certain documents.  That depends on the type of industry and in which state your business is based.  However, there are general guidelines that can be followed.  

  • The IRS has some document retention guidelines. Refer to Pub. 583 or the IRS’ small business & self-employed publication here for more specific information.  Individuals please see Pub. 552 or here.
  • Legal requirements, such as pending lawsuits, should be discussed with an attorney
  • State requirements vary, depending on the state and their statute of limitation for legal liability.  Again check with your attorney or check with your state-specific library
  • For financial records, you can check with your accountant for financial-related requirements

The following are perhaps some of the more common universal document retention guidelines shared by the Small Business Administration.  

FINANCIAL:

  • Invoices, receivables, checks, and payables –  5 years
  • Inventory – 4 years
  • Annual statements & Audit Reports – permanently retain

PERSONNEL:

  • Payroll – 6 years
  • Contracts & Insurance Records – 5 years
  • Personnel files – 3 years
  • Timecards – 2 years
  • Retirement plan info – permanently retain

GENERAL BUSINESS:

  • Contracts – 7 years
  • Copyrights – permanently retain
  • Correspondence – 3 years
  • Customer records – specific to each type of business
  • Insurance policy – as required
  • Licenses – 6 years
  • Licenses & Permits – as required
  • Property records – permanently retain
  • Sales records – specific to each type of business

In addition, if there are any pending lawsuits, all records associated with that should be retained.  Again, I am stressing that you should also consult with your attorney regarding those types of documents.

More thoughts on document retention:

It is important to note that document retention also pertains to electronic documents.  In addition, they subject to regulations.  As a certified Tax Collector for the Town of Pomfret, I wrote to the Connecticut State Library each summer with my proposed documents for destruction.  Furthermore, I included that destruction schedule in my office Policies & Procedures. It ensured that I kept current with destroying outdated documents thus saving valuable filing space.  In 2009, the State of Connecticut revised their record management & retention regulations to include email and other electronic messages. This includes such things as faxes, instant messaging, voice mails, and texting.  I would recommend that you review your state-specific regulations.

In conclusion, there is much to think about when reviewing your business records. Don’t let document retention overwhelm you.  Take it one step at a time.

  • Sit down and determine what types of records you have
  • Find out what the retention schedule is for those records
  • Write up a retention policy
  • Put the policy into action.  Make it a recurring annual task by making it a part of either year-end procedures or a summer project.

 

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