Record Retention Guide

How long should I keep records?

Knowing what record to keep, and what to shred can make your life easier and more organized. Record retention can be tricky, and the general rule of holding documents for 3 years isn’t true. In fact, the length of time to hold on to documents changes based on the action, expense, or event the document records. Any record that supports an item of income, deduction, or credit should generally be kept until the period of limitations for that tax return runs out.

The period of limitations, as defined by the IRS, is the period of time in which you can amend your tax return to claim a credit or refund, or the IRS can assess additional tax. Always keep copies of your filed tax returns, they help in preparation for future tax returns and making computations if you file an amended return. The IRS may go as far back as 6 years to audit if they believe there is any indication of fraud or significantly under reported income.

Paper records can be a pain to hold onto and organize, but keeping a backup set of records is easier now than ever, as storing files electronically has become commonplace. Paper records can be scanned and digitized to save space and clutter, and organized on the computer to create a comprehensive record collection.

Business Documents to Keep for One Year

  • Correspondence with Customers and Vendors
  • Duplicate Deposit Slips
  • Purchase Orders
  • Receiving Sheets
  • Requisitions
  • Stenographer’s Notebooks
  • Stockroom Withdrawal Forms

Business Documents to Keep for Three Years

  • Employee Personnel Records (after termination)
  • Employment Applications
  • Expired Insurance Policies
  • General Correspondence
  • Internal Audit Reports
  • Internal Reports
  • Petty Cash Vouchers
  • Physical Inventory Tags
  • Savings Bond Registration Records of Employees
  • Time Cards for Hourly Employees

Business Documents to Keep for Six Years

  • Accident Reports, Claims
  • Accounts Payable Ledgers and Schedules
  • Accounts Receivable Ledgers and Schedules
  • Bank Statements and Reconciliations
  • Cancelled Checks
  • Cancelled Stock and Bond Certificates
  • Employment Tax Records
  • Expense Analysis and Expense Distribution Schedules
  • Expired Contracts, Leases
  • Expired Option Records
  • Inventories of Products, Materials, and Supplies
  • Invoices to Customers
  • Notes Receivable Ledgers and Schedules
  • Payroll Records and Summaries
  • Plant Cost Ledgers
  • Sales Records
  • Subsidiary Ledgers
  • Time Books
  • Travel and Entertainment Records
  • Vouchers for Payments to Vendors, Employees, etc.
  • Voucher Register, Schedules

Business Documents to Keep Forever

Though federal guidelines to not require you to retain tax record indefinitely, there are many cases and reasons you will want to have access to these documents indefinitely.

  • Audit Reports from CPA’s/Accountants
  • Cancelled Checks For Important Payments (such as tax payments)
  • Cash Books, Charts of Accounts
  • Contracts, Leases Currently in Effect
  • Corporate Documents (Incorporation, charter, by-laws, etc.)
  • Documents substantiating fixed asset additions
  • Deeds
  • Depreciation Schedules
  • Financial Statements (Annual)
  • General and Private Ledgers, Year End Trial Balances
  • Insurance Records, Claims, and Policies
  • Investment Trade Confirmations
  • IRS Revenue Agents’ Reports
  • Journals
  • Legal Records
  • Minute Books of Directors and Stockholders
  • Mortgages, Bills of Sale
  • Property Appraisals by Outside Appraisers
  • Property Records
  • Retirement and Pension Records
  • Tax Returns and Worksheets
  • Trademark and Patent Registrations

Personal Documents to Keep for One Year

  • Bank Statements
  • Paycheck Stubs (Reconcile with W-2)
  • Canceled Checks
  • Monthly and quarterly mutual fund and retirement contribution statements

Personal Documents to Keep for Three Years

  • Credit Card Statements
  • Medical Bills (in case of insurance disputes)
  • Utility Records
  • Expired Insurance Policies

Personal Documents to Keep for Six Years

  • Supporting Documents for Tax Returns
  • Accident Reports and Claims
  • Medical Bills (if tax-related)
  • Property Records/Improvement Receipts
  • Sales Receipts
  • Wage Garnishments
  • Other Tax-Related Bills

Personal Documents to Keep Forever

  • CPA Audit Reports
  • Legal Records
  • Important Correspondence
  • Income Tax Returns
  • Income Tax Payment Checks
  • Investment Trade Confirmations
  • Retirement and Pension Records
  • Trust Documents
  • Vital Records (Birth Certificate, Death Certificate, Marriage License, Divorce, etc.)

Special Circumstances

  • Car Records – Keep until the car is sold
  • Credit Card Receipts – Keep with your credit card statement
  • Insurance Policies – Keep for the life of the policy
  • Mortgages, Deeds, Leases – Keep 6 years beyond the agreement
  • Pay Stubs – Keep until reconciled with your W-2
  • Property Records, Improvement Receipts – Keep until the property is sold
  • Sales Receipts – Keep for the life of the warranty
  • Stock and Bond Records – Keep for 6 years beyond selling
  • Warranties and Instructions – Keep for the life of the product
  • Other Bills – Keep until payment is verified on the next bill
  • Depreciation Schedules and Other Capital Asset Records – Keep for 3 years after the tax life of the asset

This is only a partial list of possible documents and records that should be used for informational purposes only. Sandra K. Pridemore CPA, PA is not liable for any oversight, omission, or legal action resulting from the use of this list and information.