Are you eager to spring clean your stacks of records? Not so fast. While you can safely dispose of some records, employment tax records must be kept for at least four years after filing your fourth quarter taxes for the year. They must be available for IRS review upon request.
Among other things, the tax records you maintain should include:
- Your employer identification number (EIN)
- Amounts and dates of wage, annuity, and pension payments
- Names, addresses, and Social Security numbers of employees and payment recipients
- Dates of employment
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Keeping business records organized is essential in case of an IRS audit or examination. However, retaining unnecessary documents can quickly exceed your storage capacity. Consider establishing a record retention schedule aligned with state and federal regulations, as well as your industry’s best practices.
Financial Records
Accounts Payable Ledgers & Schedules: 7 years
Accounts Receivable Ledgers & Schedules: 8 years
Audit Reports: Permanently
Bank Statements: 3 years
Cash Books: Permanently
General Ledgers, Year-End Trial Balance: Permanently
Financial Statements (Year-End): Permanently
Petty Cash Vouchers: 3 years
Invoices (Customer or Vendor): 7 years
Trial Balances (Monthly): 3 years
Expense Reports: 7 years
Tax and Legal Documents
Tax Returns, Revenue Agents’ Reports & Related Documents: Permanently
Forms 1099 Received: 7 years
W-2 Forms: 7 years
Payroll Records, Summaries & Tax Returns: 7 years
Employee Personnel Records (After Termination): 7 years
Employee Applications: 5 years
Correspondence (Legal and Tax-Related): Permanently
Deeds, Mortgages & Bills of Sale: Permanently
Trademark Registration, Patents & Copyrights: Permanently
Contracts & Leases (Expired): 7 years
Business Operations
Safety Records: 6 years
Receiving Sheets: 1 year
Purchase Orders: 3 years
Inventory Records: 7 years
Minute Books of Directors, Stockholders, Bylaws & Charter: Permanently
Retirement Plan Records: Permanently
IRA/Keogh Plan Contributions, Rollovers, Transfers & Distributions: Permanently
Digital Document Retention Guidelines
Store documents securely using encrypted cloud storage or on-premises servers.
Implement automatic backups and version control for critical financial and legal documents.
Maintain audit trails for document modifications and access history.
For disaster recovery, backup permanent digital documents in multiple locations.
The retention periods are intended as a general guideline only.
LBMC tax tips are provided as an informational and educational service for clients and friends of the firm. The communication is high-level and should not be considered as legal or tax advice to take any specific action. Individuals should consult with their personal tax or legal advisors before making any tax or legal-related decisions. In addition, the information and data presented are based on sources believed to be reliable, but we do not guarantee their accuracy or completeness. The information is current as of the date indicated and is subject to change without notice.
