The Reference Section

A collection of wealth improvement articles

Record Retention Guide for Businesses

In business, good recordkeeping is essential not only for tax reporting purposes but also for the success of the company. Generally, you need to retain records for three years after the filing due date or when you actually filed your tax return, whichever is later. Remember to add six months to this requirement for most state audit time limits. If an error is found that exceeds 25% or more of your obligation, the time limit can be expanded to six years. The guidelines below give retention periods for the most common business records, in a worst case audit scenario. Please call if you'd like assistance with your record retention program.

Accounting RecordsRetention Period
Accounts payable7 years
Accounts receivable7 years
Audit reportsPermanent
Chart of accountsPermanent
Depreciation schedulesLife of assets plus 7 years
Expense records7 years
Financial statements (annual)Permanent
Fixed asset purchasesPermanent
General ledgerLife of business plus 7 years
Inventory records7 years
(Permanent for LIFO system)
Loan payment schedules7 years
Purchase orders (1 copy)7 years
Sales records7 years
Tax returnsPermanent
Bank RecordsRetention Period
Bank reconciliations2 years
Bank statements7 years
Cancelled or substitute checks7 years
(Permanent for real estate purchases)
Electronic payment records7 years
Corporate RecordsRetention Period
Board minutesLife of company plus 7 years
Business licensesPermanent
Contracts – majorPermanent
Contracts – minorLife + 4 years
Insurance policiesLife + 3 years
(Check with your agent. Liability for prior years can vary.)
Shareholder recordsPermanent
Stock registersPermanent
Stock transactionsPermanent
Employee RecordsRetention Period
Benefit plansPermanent
Employee files (ex-employees)7 years
(Or statute of limitations for employee lawsuits)
Employment applications3 years
Employment taxes7 years
Payroll records7 years
Pension/profit sharing plansPermanent
Real Property RecordsRetention Period
Construction recordsPermanent
Leasehold improvementsPermanent
Lease payment recordsLife + 4 years
Real estate purchasesOwnership period plus 7 years