Financial Records Disposal
When To Dispose of Financial Records
From audit reports to government grants to purchase orders, the list of financial records that need to be retained is seemingly endless, and applies to a wide variety of organizations, from government agencies to educational institutions to businesses. Because these are some of the most important and most confidential documents that most entities have to deal with, having a document retention schedule that employees can stick to is vital for eliminating information security risks and potential noncompliance with the law.
Retention Duration Guide for Financial Records
| Document Type | Suggested Minimum Retention |
| Accounts receivable, accounts payable ledgers and schedules | 7 years |
| Audit reports | Permanently |
| Bank statements, electronic funds transfer documents, deposit records, cancelled checks | 7 years |
| Chart of accounts | Permanently |
| Checks for large or crucial purchases | Permanently |
| Correspondence with vendors and customers | 2 years |
| Deeds, bills of sale, mortgages for held assets | Permanently |
| Depreciation schedules and reports | Permanently |
| Donations | 7 years |
| Year-end financial statements | Permanently |
| Garnishments | 7 years |
| General business/finance ledgers, year-end trial balance | Permanently |
| Government grants (funded) | 7 years after final closure |
| Insurance policies | 3 years after expiration |
| Insurance records such as claims, accident reports, settlements | Permanently |
| Internal audit reports | 3 years |
| Invoices to customers or from vendors | 7 years |
| Inventory records | 7 years |
| Loan documentation | Permanently |
| Patents, copyrights, trademarks and related documentation | Permanently |
| Petty cash vouchers | 3 years |
| Property/asset appraisals | Permanently until sale |
| Property blueprints and utility diagrams | Permanently until sale |
| Purchase orders | 7 years |
| Sales records | 7 years |
| Corporate tax returns and worksheets | Permanently |
| Timekeeping sheets, books, cards, etc. | 7 years |
| Receipts and vouchers of payment to employees or vendors | 7 years |
| Payroll tax withholding statements | 7 years |
| Documentation of workers compensation claims | 10 years after final settlement |
Important note: This list is not a substitute for legal advice. Contact your CPA or attorney for information on specific guidelines and laws regarding records retention best practices and legal compliance.
How to Properly Dispose of Financial Records
While it is important to develop a company policy about how long to retain financial records, it is equally important to pay attention to how those documents are disposed of at the end of their lifespan. When a document has reached the end of its retention period, it is recommended that financial institutions and other organizations that handle financial documents have a plan for completely destroying that information.
You can find more information about the recommended guidelines for secure document destruction as well as digital materials on our page about disposing of contracts.
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