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RECOMMENDED DOCUMENT RETENTION

We often work with clients and friends who inquire, “How long should I keep my records?” 

Although some businesses such as banks may be governed by regulatory requirements to retain certain account information and financial records, no universal rules exist for all businesses.

So we offer the following record retention guidelines only as a suggestion—based on years of experience. Businesses should retain the listed records for at least the time periods indicated:

Type of Record                                                      Retention Period

Copies of tax returns as filed 7 years after liquidation of entity
Tax and legal correspondence 7 years after liquidation of entity
Audit reports 7 years after liquidation of entity
General ledger and journals 7 years after liquidation of entity
Financial statements 7 years after liquidation of entity
Contracts and leases 7 years after liquidation of entity
Real estate records 7 years after liquidation of entity
Corporate stock records and minutes 7 years after liquidation of entity
Bank statements and deposit slips 6 years 1
Sales records and journals 6 years 1
Other records relating to revenue 6 years 1
Employee expense reports and records relating to travel and entertainment expenses  

6 years 1

Canceled checks 3 years 1
Paid vendor invoices 3 years 1
Employee payroll expense records 3 years 1
Inventory records 3 years 2
Depreciation schedules At least tax life of asset plus 3 years
Other capital asset records At least tax life of asset plus 3 years
Other records relating to expenses 3 years 1

 

If you retain records using paperless alternatives, refer to the following revenue procedures to ensure that records are acceptable to the IRS:

  • Rev. Proc. 81-46 (clarified by Rev. Proc. 83-6) addresses retaining books and records on microfilm or microfiche (micrograph technology).
  • Rev. Proc. 97-22 updates the procedures in Rev. Proc. 81-46 for the advances in retaining records via electronic storage media such as magnetic tape, optical disk, CD-ROM, etc.
  • Rev. Proc. 98-25 provides guidance on retention of automated data process (ADP) files or machine sensible records.

Of course if you’ve got specific questions, we’re here for you. Contact us at Office@CPAsite.com or 904-396-5400.


1 From the later of the tax return due date or filing date.  (All records related to a return should be kept for at least six years if there is any concern the IRS could show a significant understatement of gross income on the return.)

 2 Longer if you use LIFO

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