A Guide to What Business Documents to Keep and For How Long

Friday, March 15th, 2019

office organization

If you’re part of running a small business, then you understand the importance of keeping relevant documents and paperwork on file. But certain paper documents only need to be kept for a specific length of time. After that time is up, it’s doubly important to destroy them.

When you hold on to sensitive information in the form of paper for longer than recommended, it increases the chances of a data breach resulting in fraud and identity theft. In fact, according to a recent study from the Ponemon Institute, dumpster diving is still a common way a company’s confidential information is accessed.  It’s a legal liability that can sink a business overnight. This is why secure shredding is of paramount importance for any office that handles paperwork and sensitive documents.

But the trick is knowing what documents to shred and when. Large businesses, corporations along with government agencies have a certain set of strict regulations to follow for document retention. Smaller businesses and solo enterprises have a little more leeway in deciding what to keep and for how long.

What Documents to Keep and for How Long

Here are some good rules of thumb to follow in knowing what business documents to shred and when to shred them.

Keep these documents forever

Don’t shred these documents! Keep them on file permanently and in a safe place for business recordkeeping purposes

  • Trademarks or copyrights
  • Periodic financial statements
  • Certified financial statements
  • Any records regarding pension plans
  • Audit reports
  • Union agreements
  • Deeds, mortgages, and bills of sale
  • Legal correspondence or other important materials
  • Patents
  • IRS determination and approval letters

Documents to keep for a bit

6 years

  • Contracts – both client and employee contracts
  • Healthcare plans – this will vary by law so consider consulting with a legal expert
  • Personnel files – all employee onboarding information, shred six years after termination date
  • Tax return records – the IRS has a guide on the period of limitations for documents regarding tax credits, deductions or income, you can access at: IRS.gov.
  • Payroll – records and summaries along with garnishments
  • Time books

4 years

  • Sales invoices
  • Expense records – for business and employee
  • Inventories – for products, materials and supplies
  • Accounts payable – including invoices ledgers and schedules
  • Purchase records
  • Ledgers – for cost, subsidiary, and accounts
  • Receiving sheets

2 years

  • Budget projections
  • Deposit slips – and their duplicates
  • Employment Applications

Shred these documents ASAP

Everything else! If the document contains information that can be used to identify customers and employees (past and present) and is not needed for documentation purposes, it goes to the shredder right away..

Even something as simple as an employee writing down their username and password on a piece of paper and then merely tossing it into a wastebasket outside can pose a serious security threat. That’s all it takes for a data breach to happen.

Review your documents annually  

Be smart about maintaining your filing system and paper management. Don’t procrastinate! (We recommend doing it in late April, when tax season ends.) Set a date to review your files and sort through it all to decide what business documents you need to keep and what need to be shredded. Simply cull the sensitive documents that no longer fall within the timeframes listed above.

Document destruction done right

Once you’re done, it’s time to shred the papers! We strongly suggest that you enlist the services of a secure document destruction company beforehand. Because all the meticulous sorting and security measures you take won’t matter if they aren’t properly destroyed and professionally disposed of in accordance with privacy laws.