Q:

What are the rules of document retention?

A:

Quick Answer

Documents such as operating agreements, audit reports, financial statements, trademark registrations and income tax returns should be retained indefinitely, while inventory documents, internal reports and business correspondence should be held for three years. The Internal Revenue Service's document retention rules may differ from a business's insurer or creditor requirements.

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Full Answer

Employment tax records, including payroll registers and holiday or vacation pay information, should be retained at least four years, according to the IRS. Other tax-related records, such as tip reports and payroll information for contractors, should be retained for three years. A business that fails to file a return, files a fraudulent return or does not report total earnings must keep these documents longer.

Businesses should always have current copies of lease agreements, insurance policies and other active contracts on file, and should keep expired copies of these documents for 10 years. Purchase receipts, warranty information and maintenance records should be retained until the item is sold, thrown out or no longer in service. The IRS recommends keeping all records relating to property until the property is sold.

Personnel records, customer invoices, vendor invoices, bank reports and sales records are generally retained for seven years, while cancelled checks and payroll summaries are usually kept at least 10 years.

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