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December 28, 2021

Guide to Retaining Paper Documents

While it’s important to properly dispose of your business’ documents, it’s equally important to know how long to save those documents before shredding them. More formally known as document retention, the practice of keeping important documents and records is essential for any successful business. There are several laws that require companies to retain their documents for a set amount of time in case of potential subpoenas or audits. Avoid the hassle and learn more about this practice with PROSHRED® Cincinnati’s guide to document retention.

Document Retention

FACTA Requirements

Document retention is an essential part of any business, but there are also regulations about the proper disposal of old documents. The Fair and Accurate Credit Transactions Act (FACTA) requires that businesses properly dispose of information in consumer reports in order to avoid unauthorized access to sensitive information. These regulations apply to businesses of any size, and failure to follow these rules could result in fines or legal action. For more information on how your business can follow FACTA regulations with paper shredding and hard drive destruction, contact PROSHRED® Cincinnati.

Building A Retention Schedule

While we’ve based our suggested document retention guidelines on federal and state laws along with common administrative practices, every business should research these laws and create their own retention policy. Creating a retention policy will let your employees know how to handle the most common document types your business utilizes. With a policy in place, your employees won’t need to second guess if they should shred or retain their documents.

Corporate Records

Every business handles general corporate records that deal with the business formation, administrative duties, or overarching strategy and structure of the company. For your records, it’s important to keep some of these documents permanently, but others can be destroyed after a set number of years based on legal requirements.

Suggested Retention Duration for Select Corporate Records*

Documents That Should be Kept Permanently

  • Bylaws and Corporate Charters
  • Organizational/administrative charts
  • Copyright, trademark and patent registrations
  • Project files
  • Legal Correspondence
  • Material Safety Data Sheets
  • Patent filings
  • Meeting agendas and minutes
  • Training manuals

 

Documents That Should be Kept for At Least 7 Years

  • Accident reports and insurance claims (7 years after settlement or resolution)
  • Contracts (7 years after expiration)
  • Inventory Records

 

Documents That Can be Kept for Less Than 7 Years

  • Affirmative Action Plans (1 year after the plan expires)
  • General/Routine Correspondence (1 year)
  • Purchase Orders (1 year)
  • Customer and vendor correspondence (2 years)
  • Administrative Correspondence* (3 years) – (Memos, emails and other correspondence related to strategy, services, programs, policies, procedures, and planning)

 

Financial Records

Financial records are some of the most important documents that any business will handle. These documents can relate to your clients or employees, and they often contain confidential information that needs to be handled properly. After your retention period is over, it’s necessary to properly dispose of these records.

Suggested Retention Duration for Select Financial Records*

Documents That Should be Kept Permanently

  • Audit reports
  • Chart of accounts
  • Checks for large or crucial purchases
  • Deeds, bills of sale, mortgages
  • Depreciation schedules and reports
  • Year-end financial statements
  • General business/finance ledgers
  • Insurance records including claims, accident reports, and settlements
  • Loan documentation
  • Patents, copyrights, and trademark documentation
  • Property and asset appraisals (until sale)
  • Property blueprints and utility diagrams (until sale)
  • Corporate tax returns and worksheets

 

Documents That Should be Kept for At Least 7 Years

  • Accounts receivable and accounts payable ledgers
  • Bank records, such as: statements, electronic funds transfer documents, deposit records, and cancelled checks
  • Donations
  • Garnishments
  • Government grants (funded) (7 years after final closure)
  • Invoices to customers or from vendors
  • Inventory records
  • Purchase orders
  • Sales records
  • Timekeeping sheets, books, cards, etc.
  • Receipts and vouchers of payment to employees or vendors
  • Payroll tax withholding statements
  • Documentation of workers compensation claims (10 years after final settlement)

 

Documents That Can be Kept for Less Than 7 Years

  • Correspondence with vendors (2 years)
  • Correspondence with customers (2 years)
  • Insurance policies (3 years after expiration)
  • Internal audit reports (3 years)
  • Petty cash vouchers (3 years)

 

Business Taxes

Retaining your tax documents is necessary to comply with IRS regulations. Keeping your tax documents can also be used as testimonial evidence in potential legal cases regarding your financial documentation.

Suggested Retention Duration for Select Business Tax Records*

Documents That Should be Kept Permanently

  • Audit reports
  • Tax returns and worksheets
  • Year-end financial statements
  • Investment trade confirmations
  • IRS agent reports
  • Insurance records
  • Chart of accounts

 

Documents That Should be Kept for At Least 7 Years

  • Sales records
  • Employee timesheets
  • Payroll withholding statements
  • Employee W-2 forms

 

Documents That Can be Kept for Less Than 7 Years

  • Internal audit reports (3 years)
  • Employee W-4 forms (5 years)

Contact PROSHRED® Cincinnati Today

Now that you’ve learned more about document retention, your company doesn’t need to question which documents to keep or shred. If you have old documents that need to be destroyed, contact PROSHRED® Cincinnati for your shredding needs.

*Important note: These lists were written as a general guideline and are not a replacement for professional advice. These guidelines could change depending on your local or state laws. Consult your CPA or a business attorney for specific recommendations on best practices and legal compliance requirements.

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