I&U CPA LLC

Record Retention​ Guidelines

These Record Retention Guidelines provide a general guideline for the retention of tax and other financial records, but the specific holding periods for any record retention policy should be given careful scrutiny in light of federal and state tax laws, any pending investigations, regulated industry requirements or contract covenants.

In addition to these general guidelines, each business should consider any industry standards which may affect the holding period of records due to the unusual legal circumstances.

Why Keep Records?
Everyone in business must keep records. Good records will help you monitor the progress of your business, prepare your financial statements, identify source of receipts, keep track of deductible expenses, prepare your tax returns, and support items reported on your tax returns. You must be able to substantiate certain elements of expenses to deduct them on your tax return.

What Kind of Records?
You may choose any recordkeeping system suited to your business that clearly shows your income and expenses. The business you are in affects the type of records you need to keep for federal tax purposes. Your recordkeeping system should also include a summary of your business transactions. This summary is ordinarily made in your business books (for example, accounting journals and ledgers). Your books must show your gross income, as well as your deductions and credits.

How Long?
The length of time you should keep a document depends on the action, expense, or event the document records. Generally, you must keep your records that support an item of income or deductions on a tax return until the period of limitations for that return runs out.

Record Retention for Businesses

Legal Documents:

• Articles of incorporation and bylaws: Permanently
• Buy-sell agreements: Permanently
• Capital stock and bond records (ledgers, transfer registers, stubs showing options): Permanently
• Contracts and leases (still in effect): Permanently
• Contracts and leases (expired): 7 years
• Employment agreements: 7 years
• Legal correspondence: Permanently
• Minutes: Permanently
• Option records (expired): 7 years
• Partnership agreements: Permanently
• Property appraisals by outside appraisers: Permanently
• Stock certificates and ledgers: Permanently

Tax Records:

• IRS or state adjustments: Permanently
• Payroll tax returns: 7 years
• Property records, including costs, depreciation reserves, year-end trial balances, depreciation schedules, blueprints and plans: Permanently
• Sales and use tax returns: Permanently
• Tax returns and work sheets: Permanently
• Revenue agents’ reports, and other documents relating to determination of income tax liability: Permanently
• Canceled checks for tax payments: Permanently

Insurance Records:

• Accident reports and settled claims: 7 years after settlement
• Fire inspection and safety reports: 6 years
• Insurance policies (still in effect): Permanently
• Insurance policies (expired): 7 years

Accounting Records:

• Auditors’ report & annual financial statements: Permanently
• Bank statements and deposit slips: 7 years
• Canceled checks:
  • – Fixed assets: Permanently
  • – General: 7 years
  • – Payroll: 7 years
  • – Taxes (payroll related): 7 years
  • – Taxes (income): Permanently
• Cash disbursements journal: Permanently
• Cash receipts journal: Permanently
• Chart of accounts: Permanently
• Correspondence (general): 2 years
• Correspondence (routine) with customers and/or vendors: 2 years
• Deeds, mortgages, bills of sale: Permanently
• Electronic payment records: 7 years
• Employee expense records: 7 years
• Fixed asset records (invoices, canceled checks, depreciation schedules): Permanently
• Freight bills and bills of lading: 7 years
• General journal: Permanently
• General ledger: Permanently
• Internal reports (miscellaneous): 3 years
• Inventory listings and tags: 7 years
• Invoices: Sales to customers/ credit memos: 7 years
• Notes receivable ledgers and schedules: 8 years
• Notes payable ledgers and schedules: Permanently
• Patent/Trademark and related papers: Permanently
• Payroll journal: 7 years
• Purchases: 7 years
• Purchase journal: Permanently
• Purchase orders: 7 years
• Requisitions: 1 year
• Scrap and salvage records (inventories, sales): 7 years
• Subsidiary ledgers (accounts receivable, accounts payable, equipment): 7 years
• Time cards and daily time reports: 7 years
• Training manuals: Permanently
• Trial balance – year end: Permanently
• Vouchers for payments to vendors, employees, etc. ((includes allowances and reimbursement of employees, officers, etc., for travel and entertainment expenses): 7 years

Personnel Records:

• Child labor certificates and notices: 3 years
• Employment application (from date of termination): 3 years
• Employment eligibility verification I-9 form (from date of termination): 3 years
• Garnishments: 7 years
• Personnel files (from date of termination): 7 years
• Union agreements and individual employee contracts (from date of termination): 3 years
• Withholding statements: 7 years

Employee Benefit Plan Records:

• Actuarial reports: Permanently
• Allocation and compliance testing: 7 years
• Brokerage/ Trustee statements supporting investments: 7 years
• Financial statements: Permanently
• General ledger and journals: Permanently
• Information returns (Form 5500): Permanently
• IRS/DOL correspondence: Permanently
• Participant communications related to distributions, terminations, beneficiaries: 7 years
• Plan and trust agreements: Permanently