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Financial Records Disposal

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When To Dispose of Financial Records

From audit reports to government grants to purchase orders, the list of financial records that need to be retained is seemingly endless, and applies to a wide variety of organizations, from government agencies to educational institutions to businesses. Because these are some of the most important and most confidential documents that most entities have to deal with, having a document retention schedule that employees can stick to is vital for eliminating information security risks and potential noncompliance with the law.

Retention Duration Guide for Financial Records

Document Type Suggested Minimum Retention
Accounts receivable, accounts payable ledgers and schedules 7 years
Audit reports Permanently
Bank statements, electronic funds transfer documents, deposit records, cancelled checks 7 years
Chart of accounts Permanently
Checks for large or crucial purchases Permanently
Correspondence with vendors and customers 2 years
Deeds, bills of sale, mortgages for held assets Permanently
Depreciation schedules and reports Permanently
Donations 7 years
Year-end financial statements Permanently
Garnishments 7 years
General business/finance ledgers, year-end trial balance Permanently
Government grants (funded) 7 years after final closure
Insurance policies 3 years after expiration
Insurance records such as claims, accident reports, settlements Permanently
Internal audit reports 3 years
Invoices to customers or from vendors 7 years
Inventory records 7 years
Loan documentation Permanently
Patents, copyrights, trademarks and related documentation Permanently
Petty cash vouchers 3 years
Property/asset appraisals Permanently until sale
Property blueprints and utility diagrams Permanently until sale
Purchase orders 7 years
Sales records 7 years
Corporate tax returns and worksheets Permanently
Timekeeping sheets, books, cards, etc. 7 years
Receipts and vouchers of payment to employees or vendors 7 years
Payroll tax withholding statements 7 years
Documentation of workers compensation claims 10 years after final settlement

Important note: This list is not a substitute for legal advice. Contact your CPA or attorney for information on specific guidelines and laws regarding records retention best practices and legal compliance.

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How to Properly Dispose of Financial Records

While it is important to develop a company policy about how long to retain financial records, it is equally important to pay attention to how those documents are disposed of at the end of their lifespan. When a document has reached the end of its retention period, it is recommended that financial institutions and other organizations that handle financial documents have a plan for completely destroying that information.

You can find more information about the recommended guidelines for secure document destruction as well as digital materials on our page about disposing of contracts.

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