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Guidelines For Records Retention

As Published In Smead Organomics
Guidelines For Records Retention

Publicity -- Smead Organomics

The yearly “file purge” is a sensitive (and somewhat scary) issue for many — because there could be harsh consequences if you toss something you really should have kept. While setting up records retention guidelines with my organizing clients, everyone asks, “How do I know if I need to keep it?” Unfortunately, all documents are different — there’s no one quick and easy answer. But the following guidelines will give you a general idea of how long you’re required to retain standard legal and financial paperwork.

A Quick Note Before We Start

Please keep in mind that these are general-purpose records retention guidelines — intended to provide commonly-accepted limits for holding onto documents typically found in a home or office filing system. If you have unusual or extenuating circumstances in your life please check with your accountant or attorney before pitching any important legal, business, or financial paperwork.

Some Items Should Never Be Thrown Out

Some documents get to live in your filing system pretty much forever — usually because those items are extremely hard to replace, and you may be asked to provide them later in life. Rather than keeping these treasures in a normal file drawer (with your utility bills and product warranties), I suggest storing such “permanent records” in an expanding file or wallet — preferably in a fire safe or safe deposit box:

  • income tax returns and payment checks
  • important correspondence (both business and personal)
  • legal documents (contracts/agreements, lawsuit-related, proof-of-something-important)
  • vital records (birth/death/marriage/divorce/adoption)
  • retirement and pension records
  • investment trade confirmations and statements that indicate buying and selling
  • CPA audit reports
  • trust documents

Business Records Need A Permanent File

Businesses are held accountable according to a much stricter set of documentation rules than individuals. To complicate matters further, many industries (like healthcare, insurance, and law) set their own legal standards related to records retention — so be sure to ask your professional association for their policies. In addition to the items listed above, all companies should create permanent files for:

  • annual financial statements
  • corporate documents (incorporation, charter, constitution, bylaws, minutes)
  • stock records
  • licenses, patents, trademarks, and registration applications
  • documents substantiating fixed asset additions
  • major purchase receipts

Keep Tax Records For Six Years

The IRS may go back six years to audit your tax returns for errors or incorrectly claimed deductions — so it’s important that you keep all tax-related documents for that length of time, including:

  • bank records
  • personnel and payroll records
  • purchase and sale records
  • travel and entertainment records
  • vendor invoices
  • settled accident claims
  • mortgages/deeds/leases on sold property
  • records on sold stocks and bonds

Keep Everyday Paperwork For Three Years

It’s rare that anyone is going to want to see an electric bill or credit card statement dating back more than a year. But you may choose to keep the following non-tax-related items for up to three years for internal use:

  • monthly financial statements
  • credit card statements
  • utility records
  • employment applications (for businesses)
  • medical bills (in case of insurance disputes)

Some Papers Don’t Fit Easily Into Categories

And then there are always those “weird” papers that don’t fit into any of these categories. You should retain these records according to the following guidelines:

  • car records (keep until car sold)
  • credit card receipts (keep until reconciled on your credit card statement)
  • A.T.M. and deposit slips (keep until reconciled on your bank statement)
  • insurance policies (keep for life of policy)
  • pay stubs (keep until reconciled with your W-2)
  • property records/builder contracts/improvement receipts (keep until property sold)
  • sales receipts (keep for life of warranty or life of the item on large purchases)
  • warranties and instructions (keep for life of product)
  • other bills (keep until the payment verified on the next bill)

Organization Is Valuable

Any of the time-limited documents mentioned above can be removed from your active filing system once the end of the current year has passed — you’ll still keep them, just in the “archive” section of your files. Separate them into color-coded file folders or wallets for each category of paperwork — using archive-quality or acid-free filing supplies to prevent damage in long-term storage. Tuck your archived files away by year in banker’s boxes — labeled with both the year and the destruct date (based on the guidelines above). Then each year, simply shred those items that have come due. You see — file purging isn’t actually as scary as it seems!

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Copyright 2001 RamonaCreel.com

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Ramona Creel is an award-winning 15-year veteran organizer and member of the National Association Of Professional Organizers. As well as having birthed “The A-To-Z Of Getting Organized,” Ramona is also the author of “The Professional Organizer’s Bible: A Slightly Irreverent And Completely Unorthodox Guide For Turning Clutter Into A Career”—and the creator of more than 200 “quick-start” business tools and templates for use by productivity professionals. She writes seven different blogs, has worked with hundreds of clients, and has delivered scores of presentations on getting organized. Ramona resides on the roads of America as a full-time RVer—living and working in a 29-foot Airstream. Learn more at and RamonaCreel.com.

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