Many businesses are unsure of how long their records need to be saved. Some save everything while others are quick to shred whenever they get the chance. With many businesses becoming paperless, it can be easy to dump those files in the recycle bin and empty it out in the blink of an eye. To avoid additional risk associated with litigation or audits by regulatory bodies, including the IRS, it is highly recommended for all companies to develop a company record retention policy and share this policy with all employees. You don’t want to find yourself in hot water over a document that could have easily been saved. Below are certain record retention guidelines that we recommend for businesses:
- Tax Returns and supporting records, along with any IRS or state adjustments, should be retained permanently.
- Payroll tax records, anything related to wages, pension payments, deposits, benefits, etc. should be retained for 7 years.
- Portions of employee files, such as I-9s and employment applications, should be retained for at least three years after date of termination, while garnishments, withholding statements, and the rest of personnel files should retained for 7 years.
- Anything related to ownership records, such as business formation documents, annual meeting minutes, by-laws, stock ledgers, property deeds, etc. should be retained permanently.
- Many source accounting records, such as bank statements, employee expense records, and freight bills and bills of lading should be retained for a minimum of 7 years.
- Accounting records, including trial balances, annual financial statements, general ledger and general journal should be retained permanently.
When it doubt, it is simply better to hold on to something rather than shredding it or emptying that recycle bin. The list above focuses on some key record retention items for businesses. Henry+Horne has put together Record Retention Guidelines to give you more in-depth guidance for record retention periods for not only your business, but for your personal records as well!