RECORD RETENTION

Records should be preserved for only as long as they serve a useful purpose or until all legal requirements are met. Record retention periods vary among companies; however, the retention periods should generally correspond with the longest statute of limitations prevailing in each state for breach of contract, breach of fiduciary duty, and professional liability claims.

Because state and governmental agency requirements vary, retention periods are usually fixed by types of records. Generally, a retention period of 10 years is created for any record that may be useful in defending a breach of contract action by a terminated employee.

Audited financial statements workpaper data, such as accounts receivable confirmations, inventory tags and tabulations, accounts payable verifications, and similar data are destroyed after 10 years.

Certain records should be retained permanently. Such records include tax returns, annual statements, general ledgers, books of original entry, and certain personnel data. Other records should be retained for periods varying from one to 10 years.

Because statutes of limitations and state and governmental agency requirements vary by state, each company should carefully consider its requirements and consult with legal counsel before adopting a retention policy.

Click here for Record Retention Schedule.