The American Institute of Professional Bookkeepers (AIPB) Volume 14, Issue 25 of Bookkeeping Tips offers listed recommended guidelines for records retention.
The article, in part, reads:
“Keeping payroll, HR and financial records indefinitely dramatically increases the risk of identity theft by hackers.
Shred sensitive documents no longer needed and wipe them off computers, printers, copiers and other equipment. Don’t rely on using File Manager or a sledge hammer because they do not insure that the wiped data cannot be hacked. Be especially careful if your firm donates equipment to other organizations.
Outside vendors that manage asset disposal can help, but they also pose risks. Choose a vendor that:
- conducts background checks on employees;
- offers risk indemnification;
- tracks assets during the disposal process; and
- disposes of your equipment in an environmentally responsible way.
Minimizing unnecessary storage
There are different guidelines for how long to keep business v. personal data:
- Employee records—keep for 3 years from termination.
- Employee earnings records—keep for at least 4 years after termination. For records involving unclaimed property, such as an unclaimed paycheck, check state laws.
- Timecards—keep for at least 3 years if your firm engages in interstate commerce (i.e., is subject to the FLSA); at least several years, regardless.
- Employment tax records—keep for 4 years from the latter of the date the tax was due or the date the tax was paid.
- Travel and entertainment records—keep mileage logs, receipts and other supporting documents for 4 years (IRS rules).
- Sales tax returns—keep as long as state law requires.
- Business property—keep records that substantiate costs and deductions (purchase, depreciation, amortization and depletion documents) until the asset is sold, traded in or disposed of plus 7 years, according to IRS guidelines.”