How long do I have to retain my business data?

This week I sat down with Tony Langford from The Langford Group to discuss business data retention. Here are his words of wisdom. Every company should periodically review their data protection and record retention policies and practices to ensure that any recent changes to their business are incorporated into this policy. With the proliferation of electronic document management systems and cloud based computing environments, many companies will undoubtedly benefit from this periodic review. If a policy is not currently established, this should be addressed as soon as possible to mitigate any risk to the business operations or any legal risk that may exist. A company should also have its legal counsel review this policy to make sure that all legal areas are covered. The policy should spell out what records should be kept and for how long. There are not only best practices to consider but also industry specific requirement that need to be taken into account. Be sure that you understand what your company is legally obligated to do and then do it!

Recommended Holding Periods For Various Document Types

Three Years

• • Auto mileage books
  • Bank deposit slips
  • Bank reconciliations
  • Budgets
  • Cancelled checks
  • Charitable acknowledgments
  • Correspondence
  • Deposit slips
  • Entertainment records
  • Expense reports
  • Expired insurance policies
  • Interim financial statements
  • Petty cash vouchers
  • Sales invoices
  • Vendor invoices
  • Depreciation schedules (keep up to 3 years after the life of asset has expired)
  • Employee personnel records (keep up to 3 years after termination)

Six Years

• • Bank loans (after payoff)
  • Bank statements
  • Contracts (after expiration)
  • Employee payroll records
  • Insurance records
  • Leases (after expiration)
  • Mortgage and notes receivable (after payoff)

Seven Years

• • Accounts payable ledgers
  • Accounts receivable ledgers
  • Canceled checks (except as shown in permanent records below)
  • Employee time records
  • Inventory records (except LIFO)
  • Note receivable ledgers
  • Payroll tax records and reports
  • Subsidiary ledgers

Permanent Records

• • Annual audited financial statements