It’s a fine line: You certainly don’t want to discard records too soon – that would make an audit even more of a headache. Still, you don’t want to hold on to paper any longer than you have to.
Some companies are using the current slowdown in business to do a little housekeeping.
Here’s a record-retention refresher worth circulating throughout your finance department:
3 years: bank deposit slips, budgets and employment applications for people you didn’t hire.
4 years: vacation/sick pay records, FICA/FUTA/Income Tax withholding and payroll registers.
5 years: accounting authorizations, accounting correspondence, dental benefits, garnishments, life insurance benefits and safety reports.
6 years: internal audit docs, insurance appraisals and salesperson commission reports.
7 years: A/P and A/R ledgers, aging reports, A/R invoices, accounts written off, bank reconciliations, bank statements, charge slips, expense reports, petty cash records, purchase orders, vendor invoices, voucher check copies, attendance records, medical benefits and time reports.
8 years: salary histories.
10 years: canceled checks, workers’ comp benefits, expired insurance policies, canceled leases, canceled notes receivable, employee withholding exemption certificates and receiving documents.
Everything else goes on your company’s “never-purge” list.
Note: When in doubt, check with your company’s CPA firm.