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Business Document Retention

The start of a new fiscal year is the perfect time to audit record retention and disposal procedures.

The Internal Revenue Code legally requires organizations to retain important company, client, vendor, and personnel information.

Consistent record retention maintains a paper trail of business activities and serves as IRS approved audit documentation.

But, holding onto documents for too long can increase the risk of a security breach and create an abundance of files to house and maintain.

So how do businesses balance the legal requirements with document lifespans?

They implement a customized record retention schedule.

The certified specialists at Sherman Oaks Accounting & Bookkeeping powered by One Source Services, Inc. can help.

Surprisingly, there are no real rules about record retention terms.

There are, however, generally accepted guidelines relevant to most organizations and circumstances.

Code Section 6001 and Publication 583 details IRS record retention guidelines.

Turn to your organization’s accountant and attorney for competent legal and accounting record retention counsel specific to your organization’s activities, and  to establish a compliant record retention schedule that should be adopted as board policy.

An annual cleanup procedure should be implemented, as well, to see that documents are audited and then safely destroyed when their retention terms have expired.

The recommendations below are not intended to replace professional legal advice and are general guidelines only. They should be modified to meet your organization’s specific needs.

The following documents should be retained indefinitely and never be discarded:
  • Audit Reports
  • Canceled Important Checks
  • Capital Stock & Bond Records
  • Cash Disbursements & Receipts
  • Cash Books
  • Chart of Accounts
  • Corporate Records, including Stock & Board Minutes
  • Depreciation Schedules
  • Financial Statements
  • General & Private Ledgers
  • Insurance Records, Policies, & Claims
  • Journals
  • Legal Matter Correspondences
  • Mortgages, Deeds, & Bills of Sale
  • Property Records
  • Real Estate Appraisals
  • Tax Returns & Worksheets
  • Trademark Registrations
  • These records may be destroyed after 7 years:
  • Accident Reports
  • Accounts Payable Ledgers
  • Accounts Receivable Ledgers
  • Canceled Routine Checks
  • Canceled Stock & Bond Certificates
  • Contracts & Leases
  • Expense Analysis & Distribution Schedules
  • Expense Reports
  • Inventories
  • Invoices
  • Payroll Records
  • Plant Cost Ledgers
  • Purchasing Dept. Purchase Order Copies
  • Records for Terminated Personnel
  • Sales Records
  • Scrap/Salvage Records
  • Subsidiary Ledgers
  • Time Books
  • Voucher Schedules & Registers
  • Vendor & Employee Payment Vouchers
The following records should be retained for 3-4 years:
  • Expired Contracts/Leases
  • Export Declarations
  • Freight Bills
  • General Correspondences
  • Employment Applications
  • Expired Insurance Policies
  • Internal Audit Records
  • Manifests
  • Petty Cash Receipts & Vouchers
  • Physical Inventory Tags
  • Savings Bond Records
  • Waybills & Bills of Lading
These documents should be retained for 1 year:
  • Bank Reconciliations
  • Deposit Slip Duplicates
  • Purchase Orders (not Purchasing Dept.’s Copy)
  • Receiving Sheets
  • Requisitions
  • Stenographer’s Notebooks

When document retention periods have expired, always ensure that records are securely destroyed.

Third-party information security providers can safely destroy them for you or provide consultation on how to do it yourself.

Sherman Oaks Accounting & Bookkeeping powered by One Source Services, Inc. simplifies record management with compliant cloud-based solutions that include record retention schedules.

We master the books so that our clients can spend more time mastering their crafts and doing what is most important to them.

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