As this year winds down, it’s natural to look forward to the
new year and begin planning for the future. But December is also the time to
look back at all of the records you’ve amassed during the past 12 months.
What
are you supposed to DO with all of this stuff? Do you keep the personnel
records indefinitely? Can you ditch the tax information after 7 years? How long
do you need to keep your partnership agreements or your audit reports?
Here are guidelines to help you determine the answers to such questions and
decide what you should keep and what you can toss if you’re part of an
association or a for-profit or not-for-profit business.
Creating a Retention Policy
To establish a plan for throwing away documents at regular intervals (aka your
retention policy), ask yourself the following questions:
-
How useful is this record to the company?
- What would the consequences be if
we didn’t keep this record?
- How often has the company been called upon to
provide this information in the past?
- What do we need to respond to the most
recent requests for information?
- Is this document required for governmental
reporting?
- Could this document be required in case of litigation?
- Do we need
this document for historical purposes?
Once you’ve answered these questions, you will have your criteria for keeping
and discarding documents. And don’t forget all of the electronic records you’re
keeping now. You’ll need to answer the same set of questions about your
company’s e-mail, as well as all the information stored on computers and
networks.
Keep Permanently
According to experts in records management, businesses, associations and
not-for-profits should permanently keep the following documents:
-
Audit reports
- Board minutes
- Cancelled checks for special contracts,
important payments, asset purchases and payment of taxes—keep each check with
the appropriate documentation to explain the purchase
- Capital stock and bond
records
- Cash books
- Charts of accounts
- Computer backups
- Constitution
and bylaws
- Contracts and leases (those that are still in effect)
- Correspondence
concerning legal and other important matters
- Deeds, bills of sale and
mortgages
- Depreciation schedules
- Insurance records
- Minutes for
directors’, stockholders’ and charter meetings
- Payroll records
- Property
records, including blueprints and plans
- Retirement information, including
IRA and Keogh contributions
- Stock and bond certificates—even the cancelled
ones
- Tax returns
- Trademark, copyright and patent registration
- Year-end
financial statements
- Year-end trial balances
Keep 5–10 Years
-
Accident reports or claims in settled cases
- Accounts payable ledgers and
schedules
- Accounts receivable journals and schedules
- Allowances and
reimbursements to vendors, employees and company officers for travel and
entertainment expenses
- Cancelled checks that were NOT for important
purchases, legal matters or taxes
- Client billings
- Expired contracts
- Expired
leases
- Inventory records
- Invoices to customers
- Invoices from vendors
- Ledgers
from subsidiaries
- Sales records
- Timecards and daily reports
- Vendor
invoices
- Voucher register and schedules
Keep 1–5 Years
-
Bank statements
- Budgets
- Company publications
- Employee personnel
records (after termination of employee)
- Employment applications for people
not hired
- Fundraising information and reports
- General correspondence with
customers and vendors
- Grant applications
- Internal audit reports
- Monthly
financial reports
- Newsletters and other collateral materials
- Petty cash
vouchers
- Policies and procedures
- Purchase orders
- Receiving sheets
- Safety
records
Industry-Specific Guidance
The length of time that you need to keep records depends to a great extent on
your industry and the type of company or not-for-profit you run. For expert
guidance about your particular industry, check with the Web site of the
Association of Records Managers and Administrators (ARMA).
Parting Words
One final tip about records: electronic files now keep track of more business
information in a smaller space. Even ephemeral means of communication such as
e-mail can be kept for decades.
For that reason alone, never type anything into an e-mail that you wouldn’t feel
comfortable reading into evidence at a trial. Especially when dealing with
bosses, supervisors, co-workers and employees, keep any clever, cutting or
off-color remarks out of letters, memos and e-mails—even the interoffice
variety.
And when in doubt about tossing a particular record, check with your attorney or
accountant just to be safe.
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