Simple Business Record Retention Guidelines (How We Decide What To Keep or Delete)

Lindsay Kalkman posted this in
Inside Rocket Media
on October 28th, 2014

I first realized I had a problem a few years ago when I walked into the office storage room. It felt like I was walking into an episode of “Hoarders.” Boxes and files were EVERYWHERE.

Every piece of paper that carried any information relevant to Rocket Media was still hanging around, waiting patiently to be pulled back into service. It was getting progressively strenuous to move around amidst the boxes—much less find what I was after.

I vowed to get the mess under control before I gave A&E a reason to do a special “Business Hoarders” edition.

Before long, our office went (almost) entirely digital, and I didn’t have to worry about finding more room for paper files in the office.

My philosophy at the time when it came to saving digital records? Save it! Save all of it! After all, digital storage is cheap. And it’s searchable so you’ll be able to find what you want easily whenever you need it, right?

This undisciplined approach worked for awhile. But the number of digital folders and files grew exponentially. Soon I found myself wallowing in a disorganized (digital) sea of information that sat on the server (discreetly) taking up space.

Enough already!

Before I went all “Edward Scissorhands” on my file boxes and digital folders, our Accounting Manager, Erica, and I researched what we absolutely needed to keep and what we could send to the chopping block.

Our main sources of information:

(Side note: All of these sources recommended consulting with a lawyer and/or CPA when in doubt to determine what is applicable to your specific business or industry. That’s good advice.)

Here are the guidelines we came up with for how long we should keep certain documents:

How long to keep different kinds of documents

Keep forever (no seriously…FOREVER):

Corporate documents (articles of organization, annual reports, Board of Director information, etc.)

  • Licensure & business registration
  • Tax returns
  • Financial statements
  • Stock records
  • Contractual agreements
  • Deeds and titles
  • Supporting documentation for tax returns if you filed a fraudulent return or didn’t file a return at all. (How’s that for motivation? “File an honest return or carry boxes of paper around with you until the end of time.”)

Keep for 10 years:

  • Worker’s compensation claim info (10 years after benefits are paid.)

Keep for 7 years:

  • Supporting documentation for tax returns. There are a few instances where the period of limitations is extended (beyond the usual 3 years), and you could be required to produce documents going back 7 years.
  • A/P, A/R ledgers
  • Invoices
  • Expense reports
  • HR documents (keep for 7 years after termination)
  • Keep for 4 years:
  • Employment tax records for employees.
  • Employee legal action (4 years after the case concludes)

Keep for 3 years:

  • Documents that support your tax returns as long as the return was filed without any issues. (If you chuck it all after 3 years, kudos to you for confidence and bravery. I’m a “better-safe-than-sorry” kind of girl so I’m keeping mine for 7.)
  • HR records for job applicants who were not eventually hired
  • Payroll records
  • Property records (keep for 3 years after the tax return that includes the sale)

Keep for 2 years:

  • Records that support wage computations (time cards, etc.)

How to dispose of unneeded documents and records

A few physical documents can be thrown away, but most will need to be shredded (better to be safe than sorry).

For digital documents, keep in mind that simply moving a file to the trash bin doesn’t mean it’s really gone. Getting rid of the digital file permanently takes a little more effort (& tech savviness) than feeding paper through a shredder’s metal teeth of death.

Hopefully this was helpful to you and will save you some time in sorting through your own piles.

As for me, it’s time to dust off the paper shredder and do some “drag and drop” calisthenics. Get ready trash bin—vacation’s over!

Lindsay Kalkman

HR & Office Manager

With 6 small kids, we don’t know if Lindsay is creating a basketball team made up entirely of her own offspring or just trying to land a new reality TV show. However, we do know that she is in charge of HR, and helps with billing and accounting at Rocket Media. (We’re not sure how she does it either, but we have our suspicions.)