Trash or Treasure?

You probably have a closet full of old boxes of receipts and offering envelopes.

Wouldn’t it feel good to purge those old moldy papers?

One of the most common questions we get is “How long do we need to save all of our financial and legal documents for?”

We thought it would be helpful to offer some guidence.

Most people hate long lists, so we came up with a simple recommendation that should work for most churches:

Retain numbers documents (bank statements, checks, 1099/W2) for 7years.

Retain word documents (minutes, bylaws, contracts,insurance policies) permanently.

Retain digital (anything from the accounting software)permanently.

This isn't perfect advice, but it's a good starting place.

For those you that prefer a long-detailed list, these recommendationsare provided by https://churchadminpro.com/

Accounting Records
Accounts payable                                     7 years
Accounts receivable                                 7 years
Audit Reports                                             Permanent
Chart of Accounts                                     Permanent
Contribution records                                7 years
Depreciation schedules                            Permanent
Expenses records                                      7 years
Financial statements(annual)                   Permanent
Fixed asset purchases                              Permanent
General Ledger                                          Permanent
Loan payment schedules                         7 years
Form 1099-MISC                                       7 years

Bank Records
Bank reconciliations                                 2 years
Bank statements                                       7 years
Canceled checks                                      7 years
Electronic payment records                    7 years

Corporate Records
Board Minutes                                           Permanent
Bylaws                                                        Permanent
Business licenses                                      Permanent
Contracts – major Life                             +4 years
Contracts – minor Life                             + 3 years
Insurance policies                                     Permanent
Leases/mortgages                                    Permanent
Patents/trademarks                                  Permanent
Form 990-T                                               7 years
Form 5578(nondiscrimination)                7 years

Employee Records
Benefit plans                                               Permanent
Employee files(ex-employees)                  7 years
Employment applications (ex-employees) 3 years
Employment taxes                                       7 years
Payroll records                                              7 years
Retirement plans                                          Permanent
Form W-2, W-4, 941                                     7 years
Time Sheets/Leave Requests                       3 years

REAL PROPERTY RECORDS
Construction records                                      Permanent
Leasehold improvements                                Permanent
Lease payment records                                   Life + 4 years
Real estate purchases                                      Permanent

The best practice is to regularly schedule a file clean up day at least once a year.  Pick a time that works best, like right after your annual meeting or after your yearly audit.  You can also encourage your bookkeeper to purge files as part of their regular work week.

Why not start working towards getting rid of all the paper?

Digital documents are accepted in legal matters.  A better option is to scan important documents instead of storing them.  This eliminates the potential of a water leak destroying years of paper data. 

Make sure they are stored on a reputable cloud storage service and that more than one person can access it.  You wouldn’t want to lose them if your laptop was stolen, or you couldn’t access them because the bookkeeper passed away and no one else had the password.

Get a shredder and starting purging today.  It really does feel good to eliminate junk you no longer need.