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Document Retention Policies: How Long Should You Keep Things On-File?
When should you hold on to documents and when should you toss them? This reference guide from Watkins Meegan should help you keep your documents under control.
Files
Retain or Toss?
Almost any self-help guru will tell you to clear out clutter and simplify your life. This usually includes throwing away old papers and files that seem to pile up everywhere, never to be looked at again. But while it's true that we all need to dispose of unused or unwanted items every once in a while, tossing the wrong paper or deleting a necessary file can have dire consequences, especially for a business.
Welcome to the world of document-retention policies, which are guidelines to help you determine when to toss and when not to. The objective of a document-retention policy is to reduce the volume of paper or data in storage, meet legal requirements for record-keeping, and stem paranoia. Policies can vary greatly from general procedures to extremely specific instructions, and neither is necessarily right or wrong. What's important is to have something in place to help you determine what you need to keep and what is okay to trash.
The following chart provides some general guidelines pertaining to document retention and will serve as a good starting point if you feel that it's time to develop or re-evaluate your personal or company policy.
Documentation |
Retain for: |
| Accident reports and claims (settled cases) | 7 Years |
| Accounts payable ledgers and schedules | 7 Years |
| Accounts receivable ledgers and schedules | 7 Years |
| Audit reports of accounts | Permanently |
| Bank reconciliations | 3 Years |
| Capital stock and bond records: ledgers, transfer registers, stubs showing issues, record of interest coupons, options, etc. | Permanently |
| Cash books | Permanently |
| Charts of accounts | Permanently |
| Checks (canceled, but see exception below) | 7 Years |
| Checks (canceled for important payments, i.e. taxes, purchases of property, special contracts, etc. Checks should be filed with the papers pertaining to the underlying transaction) | Permanently |
| Contracts and leases (expired) | 7 Years |
| Contracts and leases still in effect | Permanently |
| Correspondence (routine) with customers/vendors | 1 Year |
| Correspondence (general) | 3 Years |
| Correspondence (legal and important matters only) | Permanently |
| Deeds, mortgages, and bills of sale | Permanently |
| Depreciation schedules | Permanently |
| Duplicate deposit slips | 3 Years |
| Employee personnel records (after termination) | 7 Years |
| Employment applications | 3 Years |
| Expense analyses and expense distribution schedules | 7 Years |
| Financial statements (end-of-the-year, other months optional) | Permanently |
| General and private ledgers (and end-of-the-year balances) | Permanently |
| Insurance policies (expired) | 7 Years |
| Insurance records, current accident reports, claims, policies, etc. | Permanently |
| Internal audit reports (in some situations, longer retention may be desired) | 3 Years |
| Internal reports (miscellaneous) | 3 Years |
| Inventories of products, materials, and supplies | 7 Years |
| Invoices to customers | 7 years |
| Invoices to vendors | 7 years |
| Journals | Permanently |
| Minute books of directors and stockholders, including bylaws and charter | Permanently |
| Notes receivable ledgers and schedules | 7 years |
| Options record (expired) | 7 years |
| Payroll records, summaries, and returns, including payments to pensioners | Permanently |
| Petty cash vouchers | 3 Years |
| Physical inventory tags | 3 Years |
| Plant cost ledgers | 7 Years |
| Property appraisals by outside appraisers | Permanently |
| Property records - including costs, depreciation reserves, end-of-year trial balances, depreciation schedules, blueprints, and plans | Permanently |
| Purchase orders (except purchasing department copy) | 1 Year |
| Purchase orders (purchasing department copy) | 7 Years |
| Receiving sheets | 1 Year |
| Requisitions | 1 Year |
| Sales records | 7 Years |
| Sales tax returns | 7 Years |
| Savings bond registration records, sales, etc. | 7 Years |
| Stenographer's notebooks | 1 Year |
| Stock and bond certificates (canceled) | 7 Years |
| Stockroom withdrawal forms | 1 Year |
| Subsidiary ledgers | 7 Years |
| Tax returns and worksheets, revenue agents' reports, and other documents relating to determination of income tax liability | Permanently |
| Time Books | 7 Years |
| Trade mark registrations | Permanently |
| Voucher register and schedules | 7 Years |
| Vouchers for payments to vendors, employees, etc. (includes allowances and reimbursement of employees, officers, etc., for travel and entertainment expenses) | 7 Years |
These guidelines have been provided by Watkins Meegan, a TBS CPA Partner.
Watkins Meegan
7700 Wisconsin Avenue
Suite 500
Bethesda MD, 20814
Ph: 301.654.7555
Fax: 301.656.9115
