The HR Specialist

Company Records: What to Keep, What to Dump

A records retention schedule ensures that an organization keeps the records it needs for operational, legal, fiscal or historical reasons, and then destroys them when they’re no longer useful. You may base your records retention schedule on your own experience and research of legal mandates or on what other companies are doing.

Whatever your method, use your retention schedule as a guide, not as an executioner. Retain records longer if litigation, a government investigation or an audit seems likely. In the event that a legal action does transpire, immediately cease all disposal activities.

You have to know what you have and how long to keep it—legally and for your own business purposes—before you can establish an efficient records management system. That's why it's important to inventory your records and draw up a company retention schedule.

The retention schedule below reflects standard business practices. You must also consider state and local statutes of limitations as well as regulations of government agencies that pertain to your business. State retention statutes vary widely on tax, unemployment and workers’ compensation records, as well as on environmental and other requirements. Check with your state and regional authorities for details.

As an extra safeguard, have your CPA and your attorney review your records retention timetable before putting it into practice.

Timetable Tips

Whether you use the guidelines in this section or conduct your own research to establish a retention schedule, keep the following in mind:

  • Don’t be a “just in case” hoarder; store records only for legal, operational or archival reasons.
  • Retain and destroy documents systematically.
  • Segment records according to a retention timetable.
  • Don’t retain unscheduled temporary materials, such as drafts, reminder notes, work sheets or extra copies
  • Don’t hang onto documents just for their sentimental or public relations value. Information must earn its keep, like any other asset. A comprehensive record of the past that fosters a “company memory” can be an asset, but be sure to minimize your legal liability while doing so.

When No Requirements Exist . . .

What can you do if a law does not state a specific retention period? This is not uncommon. There may not be a stated legal requirement for certain records, or the requirement may not include a specific retention period. You may have done a thorough search to locate certain records requirements but could not find any law addressing your particular documents. Or you may have discovered that certain records must be maintained, but you could not determine for how long.

Statutes and regulations often contain a phrase, “The following records shall be maintained . . . ,” but they fail to tell you the retention period. Usually the phrase is interpreted as meaning “permanently” because there’s no permission given for destruction of the records.

How do you deal with this quandary? Under the Uniform Preservation of Private Business Records Act (UPPBRA), whenever a law does not specify a retention period, businesses should keep their records for three years. If you destroy them sooner, you risk subjecting your organization to legal problems. However, only eight states have adopted this act or something equivalent. Courts could certainly require you to hold records long enough to permit the state to monitor compliance with its regulations—a “reasonable” period of time. Based on federal records and the UPPBRA, a three-year retention period should be sufficient.

How long should you keep records if you cannot locate any legal requirements referring to them? Assuming your legal research was thorough, it is best to maintain the records for three years. You must, however, document your search effort and the assumptions you used to set the three-year period. Then, if you missed a legal requirement during your search, you have documentation to show the judge or regulatory agency that your organization had made a good-faith effort to comply with the law.


RECORD RETENTION GUIDE

KEY:  “P” = Permanent. Otherwise, figures represent suggested number of  years for retaining each type of record.

Accounting and Fiscal     Years

Accounts, charged off               7

Accounts payable ledger          7

Accounts receivable                10

Accounts receivable ledger    10

Balance sheets                            5

Bank deposit records                 6

Bank reconcilement papers       8

Bank statements                         8

Bills collectible                           7

Bills of sale of

  registered bonds                      3

Bill stubs                                     7

Bonds canceled                         3

Bonds registered                       P

Bonds, sales or transfer         15

Budget work sheets                  3

Building permits                      20

Capital stock bills of sale         P

Capital stock certificates          P

Capital stock ledger                  P

Capital stock transfer records P

Cashbooks                                25

Cash receipts &

    disbursement records          10

Cash sales slips                          3

Cash slips                                    3

Charge slips                              10

Check records                             7

Check register                           10

Checks, dividend                      10

Checks, expense                       10

Checks, paid & canceled           9

Checks, payroll                           7

Checks, voucher                         6

Checks, warrants                        P

Correspondence, accounting   5

Correspondence,

   credit & collection                   7

Cost account records                 7

Customer ledger                          P

Donations                                    7

Drafts paid                                   8

Earnings register                         3

Entertainment, gifts &

  gratuities                                    3

Estimates, projections                7

Expense reports, departmental  7

Expense reports, employees      7

Financial statements, certified   P

Financial statements, periodic   P

Fixed capital records                   P

General cashbook                      25

General journal                             P

General journal supporting

  papers                                         P

General ledger                              P

Notes, canceled                         10

Note ledgers                                 P

Payroll register                             7

Petty cash records                       3

Plant ledger                                   P

Profit & loss statements             P

Property asset summary           10

Royalty ledger                              P

Salespeople commission

  reports                                         3

Stock ledger                                  P

Tabulating cards &

  magnetic tape                              1

Traveling auditor reports          15

Trial balance, accounts

  receivable                                     3

Trial balance sheets                      P

Uncollectible accounts                 7

Work papers, rough                      2

Administrative

Audit reports, internal                      10

Audit reports, public &

  government                                        P        

Audit work papers, internal               6

Classified documents: control,

   inventories, reports                          5

Correspondence, accounting             5

Correspondence, advertising             3

Correspondence, credit & collection 7

Correspondence, engineering &

   technical                                             10

Correspondence, general                    3

Correspondence, personal                   6

Correspondence, production              2

Correspondence, purchase                  5

Correspondence, sales & service       1

Correspondence, tax                           15

Correspondence, traffic                        6

Forms control                                         5

Inventory cards                                    3

Inventory, plant records                      P

Organized charts                                   P

Requisitions                                          1

Research reports                                 20

System & procedure records              P

Telegram & cable copies                     3        

Telephone records                               P

Advertising

Activity reports, media schedules     5

Contracts                                      6 yrs. after termination

Contracts, advertising               6 yrs. after termination

Correspondence                                 5

Drawings & artwork                           P

Estimates                                              2

House organs                                      P

Market data & surveys                      5

Samples, displays, labels, etc.           P

Tear sheets                                           3

Corporate

Annual reports                                     P

Authority to issue securities             P

Authorization & appropriations

  for expenditures                         6 yrs. after

                                                       termination

Bonds, surety                                   10

Capital stock certificates                   P

Capital stock ledger                            P

Capital stock transfer records           P

Charters, constitution, bylaws

    & amendments                                P

Contracts, employee                     6 yrs. after termination

Contracts, government                  6 yrs. after termination

Contracts, labor union                    6 yrs. after termination      

Contracts, vendor                          6 yrs. after termination

Dividend checks                                 10

Dividend register                                  P

Easements                                             P

Election ballots                                   20

Election records, corporate               10

General cashbooks, treasurers’

  and auditors’                                    25

Incorporation records & certificates P

Licenses, federal, state, local              P

Permits to do business                         P

Records of mergers, consolidations,

     acquisitions, dissolutions &

     reorganizations                                 P

Reports to Securities and

     Exchange Commission                     P

Securities: documents of issuance,

      listing & registration                        P

Stock applications for issuance           P

Stock certificates, canceled                  P

Stock, stock transfer &

      stockholders’ records                     P

Stockholder minute books,

      resolutions                                        P

Stockholder proxies                             10

Stockholder reports                               P

Voter proxies                                        15

Executive

Correspondence                                   2

Policy statements, directives              P

Projects, ideas, notes                           P

Research reports                                 20

Speeches, publications                      10

Insurance

Accident reports                                 11

Appraisals                                             P

Claims, automobile                             10

Claims, group life & hospital              4

Claims, loss or damage in transit        7

Claims, plant                                          P

Claims, workers’ compensation        10

Expired policy, accident               3 yrs. after expiration

Expired policy, fidelity                3 yrs. after expiration

Expired policy, fire                       3 yrs. after expiration

Expired policy, group                  3 yrs. after expiration

Expired policy, hospital              3 yrs. after expiration

Expired policy,

   inspection certificates              3 yrs. after expiration

Expired policy, liability                3 yrs. after expiration

Expired policy, life                         3 yrs. after expiration

Expired policy, marine                   3 yrs. after expiration

Expired policy, property                3 yrs. after expiration

Expired policy, surety                    3 yrs. after expiration

Expired policy, workers’ comp      3 yrs. after expiration

Legal

Affidavits                                   10

Charters                                      P

Claims & litigation of torts &

   breach of contract                  P

Copyrights                                 P

Mortgages                                  P

Patents & related data              P

Trademarks                                 P

Manufacturing


Authorities for sale of scrap          3

Bills of material                                5

Blueprints                                       30

Correspondence, engineering

            & technical                         10

Correspondence, production        2

Credit memoranda                           5

Credit ratings & classifications     2

Drafting records                               8

Draftings & tracings, original        P

Inspection records                          5

Inventory records                            7

Invoice copies                                  7

Invoices, received                           7

Job records                                     10

Journals                                             P

Ledgers                                              P

Operating reports                           10

Order register                                    6

Production reports                          6

Quality control reports                    5

Receipts, delivery                             3

Reliability records                             P

Specifications, customer                  P

Stores’ issue records                        3

Time & motion studies                     P

Tool control                                       5

Work orders                                       5

Personnel

Accident reports, injury claims,

   settlements                                        7

Applications, changes,

   terminations                                       3

Attendance records                            4

Clock records                                       4

Correspondence                                  6

Daily time reports                                5

Disability & sick benefits records    4        

Earnings records                                  P

Employee contracts                             7

Employee service records                   P

Fidelity bonds                                      3

File, individual employee                    3

Garnishments                                        7

Health & safety bulletins                    4

Injury frequency charts                     10

Insurance records: group, employee 6

Medical folders, employee          30 yrs. after termination

Paychecks                                            P

Payroll records, after termination     P

Pension plan                                        P

Pension plan, applications                 P

Pension plan, claims                           P

Pension plan, correspondence         P

Rating cards                                         5

Salary & rate changes                      10

Salespeople auto records                   2

Salespeople expense accounts          4

Salespeople performance records      P

Time cards                                             7

Time tickets                                            7

Time tickets, receipted                          7        

Training manual                                     P

Union (collective bargaining)

            agreements after termination   P

Withholding, exemption certificate    3

Workers’ compensation reports       11

Plant and Property


Appraisals                                           P

Damage reports                                  7

Deeds, titles                                        P

Depreciation schedules                     P

Inventory records                             16

Leases                                                  P

Maintenance & repair, buildings   10

Maintenance & repair, machinery   5

Plans & specifications                       P

Plant account cards, equipment

  records, historical folders                P

Purchase, lease records                      1

Sales                                                      7

Space allocation records                    2

Taxes                                                     P

Water rights                                         P

Purchasing

Acknowledgments                              3

Bids, awards                                         3

Contracts                                    6 yrs. after termination

Correspondence                                   5

Exception notices                                  6

Orders                                                     7

Purchase orders                                     3

Purchase requisitions                            1

Quotations                                              3

Receiving reports                                   6

Receiving slips                                       4

Vendors’ contracts                                P

Sales and Marketing

Claims (loss or damage)                        5

Complaints                                              5

Contract progress reports         6 yrs. after termination

Contracts, customer                 6 yrs. after termination

Contracts, representatives,

   agents, distributors                6 yrs. after termination

Correspondence                                     1

Discount rates                                        5

Guarantees, warrantees                          6

Invoices, copies                                      6

Invoices received                                    7

Mailing & prospect lists                         2

Market research studies & analysis     P

Market surveys                                       5

Orders acknowledgment                         4

Orders filled                                              8

Price lists                                                  P

Shipping notices & reports                    4

Tax-exempt sales                                     5

Taxation

Agent’s reports                                        P

Annuity or deferred payment plan        P

Correspondence                                     20

Depreciation schedules                          3

Dividend register                                      P

Employee withholding certificates         8

Excise reports                                            5

Exemption status                                       P

Inventory reports                                    16

Real estate                                                15

Sales & use                                                P

Social Security                                           P

Tax bills & statements                              P

Tax returns & working papers               P

Traffic

Aircraft operating & maintenance         10

Bills of lading                                             3

Delivery reports                                          3

Drive vehicle inspection reports             3 months

Employee travel                                         1

Export declarations                                   4

Freight bills                                                5

Freight claims                                            5

Leases                                                        6

Manifests                                                   1

Receiving documents                               5

Routing records                                         1

Shipping instructions                                6

Shipping tickets                    &nb


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