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August012015
Business Record Retention Guide

Robert Sattler
08.01.2015 | Berdon Business Advisory Services
Knowing What Stays and What Goes and When.

JUST HOW LONG DO YOU NEED TO KEEP RECORDS? Do those ledgers and cancelled checks have to pile up forever? What about correspondence? Legal documents? Tax returns? Emails? Electronic documents? While there is no quick answer to these questions that’s right for every business, you can develop a practical record retention system that will improve efficiency, produce cost benefits, and meet regulatory and legal requirements.

Once you do, distribute it to all your employees, with clear guidelines on rules and responsibilities for record identification, retention, protection, retrieval, and disposition. Consistent application is the most important aspect of your record retention policy.

Record retention policies can be inferred from statutes of limitations and laws regarding the availability for certain documents, which vary from state to state. You can eventually destroy most, but not all, documents. Storing documents electronically may achieve dramatic reductions in retrieval costs and space requirements; however, electronic documents are still subject to record retention policies. Certain important paper documents such as the agreements noted below, which are permanent in nature, should be preserved physically and can also be stored electronically for easy access and referral. Your IT department should periodically make backups of all the information on your network – including emails, word processing documents, spreadsheets, and other electronic documents. IT should also routinely purge electronic documents just as you would purge paper documents.

RETAIN PERMANENTLY

Some documents – especially those that establish your business and record its ongoing progress — should be kept permanently. Regardless of industry, you should always retain:

  • Articles of incorporation
  • Bylaws
  • Partnership agreements
  • Licenses from government authorities
  • Capital stock and bond ledger
  • Canceled stock and bond certificates
  • Annual financial statements
  • General ledgers
  • Minutes from partner or stockholder meetings
  • Legal correspondence
  • Firm tax returns and work-papers
  • Copyright agreements
  • Blueprints
  • Bills of sale
  • Deeds to property
  • Title searches
  • Your employee manual
  • Contracts with present employees
  • Payroll records (W-2s, 941s, journals, ledgers)
  • Appraisals
  • Personnel data

Here is a guide for when to dispose of other documents. Keep in mind that your business is unique and you may want to adjust these timeframes to your own needs and to federal and state requirements for your industry. When in doubt, consult your financial advisor or your attorney.

Type of RecordRetention Period (years)
Accident reports and claims7 after accident or settlement
Canceled checks, bank statements, deposit slips7
Invoices 7
Correspondence 1 + current
Daily cash reports, remittance advices, bank deposit slips1
Disability benefits 4 after expiration or settlement
Discrimination charges by employees7 after settlement
Employee contracts 7 after termination
Employee medical history
3 after termination
Equipment records
7
Expense Reports 7
HR and related correspondence 6 plus current year; longer for some supporting documents
Individual tax returns 7 from date of filing or 1 year after termination, whichever is longer
INS 1-9 forms, to comply with Immigration Reform and Control Act 10 after expiration or settlement
Insurance documents, including policies, reports, claims and coverage information 7
nterim financial statements 10 after termination
Leases and contracts7
Other periodic financial reports10 after expiration or settlement
Payroll data and authorization7 after termination
Personnel counseling records7
Personnel data, applications, and contracts – former employees7 after termination
Applications for positions, resumes, or other job advertisements and replies 7 after termination for employees; 1 after completion of selection process for others
Documents relating to promotion, demotion, layoff, or discharge of an employee7 after change in status
Salary rates and changes 3 after termination
User manuals for equipment and softwareUntil disposition
Vendors’ invoices and petty cash slips7
Warranties and service agreements 1 after expiration

RECORD DESTRUCTION

Once a financial document has outlived its useful life, see that it is destroyed in a way that would prevent it from being retrieved and used for other purposes. Look into contracting with a qualified document shredding service. For electronic documents, not only the network but the backup media need to be purged to be consistent with the record retention policy.

If you have any question about the proper retention and disposition of your personal or business record, contact your Berdon advisor or Robert Sattler at 212.331.7518 or rsattler@berdonllp.com.