Financial Guidelines

Record Retention for Business

In business, good record keeping is essential not only for tax reporting purposes, but also for the success of the company. The guidelines below give retention periods for the most common business records. Call us if you’d like more information or assistance with your record retention program.

Accounting Records	Retention Period
Accounts payable	7 years
Accounts receivable	7 years
Audit reports	Permanent
Chart of accounts	Permanent
Depreciation schedules	Permanent
Expense records	7 years
Financial statements (annual)	Permanent
Fixed asset purchases	Permanent
General ledger	Permanent
Inventory records	7 years (1)
Loan Payment schedules	7 years
Purchase orders (1 copy)	7 years
Sales records	7 years
Tax returns	Permanent
Bank Records	Retention Period
Bank reconciliations	2 years
Bank statements	7 years
Cancelled checks	7 years    (2)
Electronic payment records	7 years
Board minutes	Permanent
Bylaws	Permanent
Business license	Permanent
Contracts-major	Permanent
Contracts-minor	Life + 4 years
Insurance policies	Life + 3 years (3)
Leases/mortgages	Permanent
Patents/trademarks	Permanent
Shareholder records	Permanent
Stock registers	Permanent
Stock transactions	Permanent
Employee Records	Retention Period
Benefits plan	Permanent
Employee files (ex-employees)	7 years (4)
Employment applications	3 years
Employment taxes	7 years
Payroll records	7 years
Pension/profit sharing plans	Permanent
Real Property Records	Retention Period
Construction records	Permanent
Leasehold improvements	Permanent
Lease payment records	Life + 4 years
Real estate purchases	Permanent
(1) Permanent for LIFO system. (2) Permanent for real estate purchases. (3) Check with your agent.  Liability for prior years can vary. (4) Or statute of limitations for employee lawsuits.
back to top

Record Retention for Individuals

back to top

Good record keeping can cut your taxes and make your financial life easier. How long to keep records is a combination of judgment and state and federal statutes of limitations. Since federal tax returns can generally be audited for up to three years after filing and up to six years if the IRS suspects under reported income, it’s wise to keep tax records at least seven years after a return is filed. Requirements for records kept electronically are the same for paper records.

Generally, follow these recommended retention periods for various documents:

Records	Retention Period
Tax returns (uncomplicated)	7 years
Tax returns (all others)	Permanent
W-2's	7 years
1099's	7 years
Cancelled checks supporting tax deductions	7 years
Bank deposit slips	7 years
Bank statements	7 years
Charitable contributions documentation	7 years
Credit card statements	7 years
Receipts, diaries, logs pertaining to tax return	7 years
Investment purchase and sales slips	Ownership period + 7 years
Dividend reinvestment records	Ownership period + 7 years
Year-end brokerage statements	Ownership period + 7 years
Mutual fund annual statements	Ownership period + 7 years
Investment property purchase documents	Ownership period + 7 years
Home purchase documents	Ownership period + 7 years
Home improvement receipts and cancelled checks	Warranty period for item
Retirement plan annual reports	Permanent
IRA annual reports	Permanent
IRA nondeductible contributions Form 8606	Permanent
Insurance policies	Life of policy + 3 years (1)
Divorce documents	Permanent
Loans	Term of loan + 7 years
Estate planning documents	Permanent
(1) Check with your agent.  Liability for prior years can vary.
	back to top

Due Dates

back to top

Below is a list of the principal annual tax due dates. The effect of Saturdays, Sundays, and federal (but not state) holidays has not been taken into account.

Date
January 15	Individuals Make a payment of your 4th quarter estimated tax. If you didn't pay your income tax for the year through withholding (or didn't pay in enough tax that way). Use Form 1040-ES or pay by credit card or by EFTPS. This is the final installment date for your estimated tax. Farmers and fishermen Pay your estimated tax using Form 1040-ES or pay by credit card or by EFTPS. You can then file your income tax return (Form 1040) by Apr. 15. If you don't pay at this time, your tax return will be due March 3rd.
January 31	All employers Give your employees their copies of Form W-2. All businesses Give an annual information statement to recipients of certain payments you made during the year. (You can use a copy of the appropriate Form 1099.) Individuals File your income tax return (Form 1040) if you didn't pay your last installment of estimated tax by Jan. 15. Filing your return now prevents any penalty for late payment of the last installment.
February 17	Individuals If you claimed exemption from income tax withholding in the prior year on the Form W-4 you gave your employer, you must file a new Form W-4 by this date to continue your exemption for another year.
February 28	All businesses File an information return (Form 1099) with IRS for certain payments you made during the year. There are different versions of Form 1099 for different types of payments. Use a separate Form 1096 to summarize and transmit each separate version. For a 30-day extension of time to file, use Form 8809. The due date for electronic filers is April 1st. All employers File Form W-3 along with Copy A of all the Form W-2s you issued for the year. The due date for electronic filers is April 1st. Large food and beverage establishment employers File Form 8027 to report tip income and allocated tips. Use Form 8027-T to summarize and transmit Form 8027 if you have more than one establishment. The due date for electronic filers is April 1st.
March 3	Farmers and fishermen File your income tax return (Form 1040) and pay any tax due. However, you have until April 15th, if you paid your estimated tax by Jan. 15th..
March 17	C corporations and S corporations File a calendar year income tax return (Form 1120, Form 1120-A or Form 1120S) and pay any tax still due. If you want an automatic six-month extension, file Form 7004 and deposit what you estimate you owe. S elections File Form 2553 to choose to be treated as an S corporation. If Form 2553 is filed late, S treatment will begin with the following calendar year (unless IRS determines there was reasonable cause for failure to file on time).
April 15	Individuals File an income tax return (Form 1040, Form 1040A, or Form 1040EZ), and pay any tax due. Taxpayers who can't make payments should request (on Form 9465) an agreement to pay in installments. If you want an automatic four-month extension to file, file Form 4868 and estimate your tax or pay by credit card. Then file Form 1040 or Form 1040A by Aug. 15. If you want an additional two-month extension, file Form 2688 as soon as possible, so that your application can be acted on before Aug. 15. A U.S. citizen or resident whose tax home or abode is outside the U.S. and Puerto Rico and a U.S. citizen or resident in military or naval service on duty outside the U.S. and Puerto Rico get automatic two-month extensions, see June 16, below. If you paid cash wages of $1,300 or more in the year to a household employee you must file Schedule H with your income tax return (Form 1040) and report any employment taxes and withheld income taxes for those employees. Individuals Contributions to an IRA for for the prior year must be made by this date. Individuals If you aren't paying your income tax through withholding (or won't pay in enough tax during the year that way), pay the first installment of your estimated tax by this date. Use Form 1040-ES or pay by credit card or by EFTPS. Partnerships File a calendar year return (Form 1065) and provide each partner with a copy of Schedule K-1. For an automatic three-month extension, file Form 8736. If an additional 3-month extension is needed, file Form 8800. Corporations Deposit the first installment of estimated income tax for the year.
June 15	Individuals If you are a U.S. citizen or resident alien living and working (or on military duty) outside the U.S. and Puerto Rico, file your Form 1040 and pay any tax, interest and penalties due. Otherwise, see April 15, above. However, if you are a participant in a combat zone you may be able to further extend the filing deadline. Make the second installment payment of your current year estimated tax, if you aren't paying your income tax for the year through withholding (or won't pay in enough tax that way). Use Form 1040-ES or pay by credit card or by EFTPS. Corporations Deposit the second installment of estimated income tax for the current year.
July 15	Partnerships File a calendar year income tax return if you were given an automatic 3-month extension.
July 31	All employers If you maintain an employee benefit plan, such as a pension, profit-sharing, or stock bonus plan, file Form 5500 or Form 5500-EZ for the prior calendar year. If you use a fiscal year as your plan year, file the form by the last day of the seventh month after the plan year ends.
August 15	Individuals If you were given an automatic four-month extension to file your income tax return for the prior year, file Form 1040 and pay any tax, interest, and penalties due.
September 15	Individuals Make the third installment payment of your current estimated tax, if you aren't paying your income tax for the year through withholding (or won't pay in enough tax that way). Use Form 1040-ES or pay by credit card or by EFTPS. C corporations and S corporations File a calendar year income tax return (Form 1120 or Form 1120-A, or Form 1120S) and pay any tax due if you were given an automatic six-month extension. Corporations Deposit the third installment of current estimated income tax.
During November	Income tax withholding Request employees whose withholding exemptions will be different in 2004 to fill out a new Form W-4. Earned income credit Request each eligible employee who wants to receive advance payments of the earned income credit to fill out a new Form W-5.
December 15	Corporations Deposit the fourth installment of estimated income tax for the current year
Employment Tax Deposits	Income Tax Withholding, FICA Taxes, Backup Withholding Employment taxes are withheld income tax, FICA contributions and backup withholding on reportable payments. Generally, an employer must make either MONTHLY or SEMI-WEEKLY deposits during a calendar year based upon the aggregate amount of employment taxes paid during the "lookback" period. The lookback period for each calendar year is the 12-month period that ended the preceding June 30. Thus, an employer's obligation to make deposits in 2004 will be based upon the aggregate employment taxes paid during the period July 1, 2002, through June 30, 2003. (New employers are considered to have an aggregate tax liability of zero for any calendar quarter in which the employer did not exist.) Monthly Deposits. Monthly deposits are required if the aggregate amount of employment taxes reported by the employer for the lookback period is $50,000 or less. Monthly deposits are due on the 15th day of the following month in which the payments were made. Semi-weekly Deposits. An employer is a semi-weekly depositor for the entire calendar year if the aggregate amount of employment taxes during the lookback period exceeds $50,000. Further, a monthly depositor will become a semi-weekly depositor on the first day after the employer becomes subject to the One-Day Rule, discussed below. Semi-weekly deposits are generally due on either Wednesday or Friday — depending upon the timing of the employer's pay period. Employers with payment dates (paydays) that fall on Wednesday, Thursday or Friday must deposit the employment taxes on or before the following Wednesday. Employers with payment dates that fall on Saturday, Sunday, Monday or Tuesday must make their deposit on or before the following Friday. However, an employer will always have three banking days in which to make the deposit. Thus, if any of the three weekdays following the close of a semi-weekly period is a holiday, then the employer will have an additional banking day in which to make the deposit. One-Day Rule. If an employer has accumulated $100,000 or more of undeposited employment taxes, then the taxes must be deposited by the close of the next banking day. Federal Unemployment Taxes The calendar year is divided into four quarters for purposes of determining when deposits of federal unemployment tax are necessary. The periods end on March 31, June 30, September 30 and December 31. If the employer owes more than $100 in undeposited federal unemployment tax at the end of a quarter, then the tax owed must be deposited by the end of the next month.
	back to top