Record retention guidelines

Part of taking care of business is taking care of records and receipts. Good documentation practices can help business owners identify new income sources, monitor expenses and prepare auditable tax returns and financial statements.

But how should owners store business records? And for how long?

You can choose any recordkeeping system that works for your business — as long as it clearly shows evidence of income and expenses (aka, burden of proof). Taxpayers are responsible for validating the information on their tax returns, especially if they claim a deduction.

Document retention guidelines vary based on the action, event or expense that’s captured in the document. Some documents need to be stored for one, three or seven years, while others need to be retained forever.

Use this table as a general guide:

Item	Record retention
1099s	7 years
Accident reports/claims (settled cases)	7 years
Accounts payable and receivable ledgers and schedules	7 years
Audit reports	Permanent
Bank deposit slips	7 years
Bank reconciliations	2 years
Bank statements	7 years
Board minutes	Permanent
Brokerage statements (year-end)	Ownership + 7 years
Business licenses	Permanent
Bylaws	Permanent
Capital stock and bond records	Permanent
Cash books	Permanent
Charitable contribution records	7 years
Chart of accounts	Permanent
Checks — taxes, real estate, special contracts (file with papers related to transactions) Checks — supporting tax deductions for individual tax return Checks — all other	Permanent 7 years 7 years
Construction records	Permanent
Contracts — major Contracts — minor	Permanent Life + 4 years
Correspondence — general Correspondence — legal and important matters Correspondence — routine (with customers and/or vendors)	2 years Permanent 2 years
Credit card statements	7 years
Deeds, mortgages and bills of sale	Permanent
Depreciation schedules	Permanent
Dividend reinvestment records	Ownership + 7 years
Divorce documents	Permanent
Electronic payment records	7 years
Employee files (ex-employees)	7 years
Employment applications	3 years
Employment taxes	7 years
Estate planning documents	Permanant
Expense records	7 years
Financial statements (annual)	Permanent
Fixed asset purchases	Permanent
General/private ledgers	Permanent
Home purchase and improvement documents	Ownership + 7 years
Home repair receipts	Warranty period
Insurance policies	Life + 3 years
Insurance records, current accident reports, claims, etc.	Permanent
Internal audit reports (longer retention periods may be desirable)	3 years
Inventory records — LIFO Inventory records — all other	Permanent 7 years
Investment purchase and sales documents	Ownership + 7 years
IRA annual reports and nondeductible contributions Form 8606	Permanent
Journals	Permanent
Leasehold improvements	Permanent
Lease payment records	Life + 4 years
Leases/mortgages	Permanent
Loan payment schedules	7 years
Loans	Term of loan + 7 years
Mutual fund annual statements	Ownership + 7 years
Notes receivable ledgers and schedules	7 years
Options records (expired)	7 years
Patents/trademarks	Permanent
Payroll records	7 years
Pension/401(k)/profit-sharing plans	Permanent
Petty cash vouchers	3 years
Physical inventory tags	3 years
Plant cost ledgers	7 years
Property appraisals by outside appraisers	Permanent
Property records, including costs, depreciation reserves, year-end trial balances, depreciation schedules, blueprints and plans	Permanent
Purchase orders	7 years
Real estate purchases	Permanent
Receiving sheets	1 year
Retirement plan annual reports	Permanent
Requisitions	1 year
Sales commission reports	3 years
Sales records	7 years
Scrap, salvage records (inventories, sales, etc.)	7 years
Shareholder records	Permanent
Stock registers and transactions	Permanent
Subsidiary ledgers	7 years
Tax returns and other documents relating to determination of income tax liability	7 years*
Time books/cards	7 years
Trademark registration and copyrights	Permanent
Trial balance (year-end)	Permanent
Training manuals	Permanent
Union agreements	Permanent
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
W-2 forms	7 years

*Tax returns supporting net operating loss carryforwards should be maintained until the net operating loss is used, plus seven years. Tax documents that support basis in a pass-through entity (K-1s) should be maintained until the interest in the entity is disposed of, plus seven years.

How Wipfli can help

Not sure what to store and what to shred? Contact the audit and accounting team at Wipfli for best practices on record retention. Together, we can create a plan and a schedule to safeguard important records — and use them to uncover important insights. Contact us today to get started.

Save it or shred it? Use this record retention guide for business documents