Spring is here, and now is a good time to rid the office of unnecessary paperwork that has accumulated over the past year. As you sort out the documents you want to discard, be sure you and your colleagues pay attention to the IRS regulations about how long specific business records need to be kept on file. To simplify the process of deciding what you need to keep and what you can discard, the Better Business Bureau, or BBB, offers the following record retention schedule.

According to IRS guidelines, the following documents can be discarded after seven years:

• Accident records and claims
• Accounts payable and receivable ledgers and
schedules
• Canceled checks
• Expense analyses and distribution schedules
• Expired contracts and leases
• Expired option records
• Expired insurance policies
• Inventories (of products, materials and supplies)
• Invoices (customer and vendor)
• Labor records
• Notes receivable ledgers and schedules
• Payroll records and related documents
• Plant cost ledgers
• Purchasing department copy of purchase orders
• Royalty computations
• Safety records
• Sales records
• Scrap and salvage records
• Canceled stock and bond certificates
• Subsidiary ledgers
• Time books
• Vouchers for payments to vendors, employees
and related parties
• Excise tax computations
• Internal audit reports
• Time cards and clock records

These documents can be discarded after three years:

• Bank deposit tickets
• Bank reconciliations
• General correspondence
• Employee savings bond registration records
• Employment applications
• Interim financial statements
• Miscellaneous internal reports
• Petty cash vouchers
• Physical inventory tags
• Purchase orders
• Receiving sheets

These documents can be discarded after one year:

• Requisitions
• Stenographers’ notebooks
• Stockroom withdrawal forms

According to IRS guidelines, the following items listed should be kept permanently and never discarded:

• Accountants’ audit reports
• Annual financial statements
• Bills of sale for important purchases
• Canceled checks for important purchases
• Capital stock and bond records or other records dealing
with the firm’s capital structure
• Cash books
• Charts of accounts
• Contracts and leases (major and/or current)
• Correspondence (legal and important matters)
• Credit history
• Deeds and mortgages
• Depreciation schedules
• Employee personnel records (after termination)
• Financial statements (year-end)
• General and private ledgers
• Insurance records
• Journals
• Minute books, bylaws and certificates of incorporation
• Pension records
• Property appraisals
• Property records
• Tax returns (along with related documents and worksheets)
• Trademark registrations

BBB cautions businesses that failing to shred sensitive materials (such as financial records, tax documents and employee records) can easily put a business at risk of a very damaging data breach.
To shred the materials you plan to discard after your spring cleaning, please come out to the free BBB Shred Day held in your community this April. More details about the timing and location of the semi-annual BBB Shred Day event can be found at www.centraltx.bbb.org/shred.

For more information about the IRS regulations on record retention, visit www.irs.gov. For more business advice from BBB, check out www.bbb.org.

BBB’s mission is to be the leader in advancing marketplace trust. BBB accomplishes this mission by creating a community of trustworthy businesses, setting standards for marketplace trust, encouraging and supporting best practices, celebrating marketplace role models and denouncing substandard marketplace behavior.

Businesses that earn BBB accreditation contractually agree and adhere to the organization’s high standards of ethical business behavior. BBB is the preeminent resource to turn to for objective, unbiased information on businesses and charities.

Contact BBB serving Central, Coastal and Southwest Texas at 512-445-4748.