We’ve had a lot of questions about document retention over the last few weeks. The most common questions we get are “How long do I need to keep legal/financial documents?” and “Why do I need to keep them at all?” The main reason you need to keep documents is that in the event of an internal audit or an audit from the IRS, you’ll need to gather every last one of those legal or financial records for review. As for how long you should plan on keeping those documents, well, that’s a different story for every situation.
At eFileCabinet, we like not having to worry about retention, as files can be stored permanently, but we understand that many businesses still keep paper records, and filing those documents takes time and space. We just had a webinar about document retention, and we will be doing another one soon, where we will be offering CPE credit. Be sure to check back on the date and to join us!
Here is a brief list of common retention times. Before you throw anything out, make sure you do some extra research of your own.
Individual Tax Records—7 Years/Permanent
Business Records and Business Tax Records—Permanent
Bank Statements—3 Years
Accounts Payable Ledgers—7 Years
Accident Reports and Claims—7 Years
Mortgages, Deeds, Bills of Sale—Permanent
Expired Mortgages, Loans, Leases—7 Years
Employment Applications—3 Years
Expired Insurance Policies—3 Years
Sales Commission Reports—3 Years
Sales Records—7 Years
Time Books—7 Years
For a more complete list, visit these references from the Better Business Bureau and CPA.net.