Record Retention - A guide to avoiding document overload:

Today, more than ever, business owners suffer from document overload. The two questions most asked are: "Which records should I keep?" and "Which records can I destroy?"

A well defined program is an important part of your record keeping system. Factors to consider when establishing a record retention program include federal and state tax laws, labor laws, government regulations, statutes of limitation on litigation that may affect your business and the general information retrieval needs of your business.

The periods listed in this guide are the recommended minimums. IRS audits are usually initiated within three years after the filing date on income tax returns. However, they are entitled to audit a return within seven years when negligence is involved, and indefinitely in cases of fraud. The following is a guide for basic one year, three year, seven year, and permanent record retention.

• ONE YEAR:
  purchase orders (except purchasing department copy)
  stenographers notebooks
  stockroom withdrawal forms
• THREE YEARS:
  bank reconciliation's
  general correspondence
  employment applications (not hired)
  expired insurance policies
  internal audit reports and working papers
  miscellaneous internal reports
  petty cash vouchers
  physical inventory tags
  receiving sheets
• SEVEN YEARS
  accident reports and claims for settled cases
  accounts payable ledgers (computer runs)
  accounts receivable ledgers (computer runs)
  automobile logs
  bank statements
  benefits (after expired)
  bills of lading
  cash books
  cash register tapes
  canceled checks
  commission records
  correspondence with customers
  expired contracts and leases
  employee personnel records after termination
  expense reports
  general journals
  inventory records
  investments (after disposal)
  invoices to customers and from vendors
  notes receivable ledgers (computer runs)
  note payable ledgers (computer runs)
  payroll tax returns
  purchase orders
  sales tax returns
  time cards
• PERMANENT
  articles of incorporation and bylaws
  capital stock and bond records (ledgers, transfer registers, etc.)
  legal and other important correspondence
  deeds and mortgages
  copyright and trademarks
  fixed assets acquisition invoices
  depreciation schedules
  employee benefit plan documents and amendments, including accounting records and participant's allocation schedules
  year end financial statements
  general ledgers
  licenses and permits
  minute books - Board of Directors and Stockholders meeting
  patents
  property appraisals by outside appraisers
  property records (costs, blueprints, and plans)
  tax returns and worksheets, revenue agent's reports and other documents relating to determination of tax liability
  KEEP RELATED CANCEL CHECKS TO ABOVE ITEMS