To shred or not to shred?

An estimated 17.6 million people — 7 percent of U.S. residents age 16 or older — were victims of identity theft in 2014, a trend that has been on the rise since 2012, according to the Bureau of Justice Statistics. Of those victims, two-thirds of incidents resulted in direct financial loss.

In an age when identity theft and fraud is rampant, you may be wondering how to securely dispose of your outdated records. To shred or not to shred, that is the question.

Record retention for businesses

As a business owner, shredding unnecessary documents will help safeguard your company from security breaches and declutter unnecessary data in a secure manner. While proper shredding and record retention is a good best practice, it’s also required by law.

In the United States, many municipal and state government agencies require businesses to take responsibility for the security of sensitive data in their custody. The retention schedule below outlines data disposal periods for businesses and details whether information should be kept on file permanently. Keep in mind, both manual and computer records have the same required retention period.

Business Records

• Accident reports/claims (settled cases)
        Retention Period: 7 years
• Accounts payable ledgers and schedules
        Retention Period: 7 years
• Accounts receivable ledgers and schedules
        Retention Period: 7 years
• Attendance records
        Retention Period: 4 years
• Audit reports
        Retention Period: Permanently
• Bank statements, including reconciliations and deposit slips
        Retention Period: 7 years
• Checks (canceled — see exception below)
        Retention Period: 7 years
• Check cancellations for important payments (taxes, purchases of property, special contracts). Checks should be filed with paper pertaining to the underlying transaction
        Retention Period: Permanently
• COBRA records
        Retention Period: 6 years after applicable period
• Contracts, mortgages, notes, leases
        Retention Period: 7 years after expiration

Record retention for individuals

As an individual, shredding unnecessary documents is one of the easiest ways to prevent identity theft. It’s important to sort through your file cabinets and paperwork, and get your desk drawers organized biannually. You may wonder if you really need that receipt from two years ago or the check register that is now three years old.

While it’s not necessary to hang on to everything, record retention is an important step in getting your finances — tax returns, real estate records, investments, and bank and credit card statements — organized. The retention schedule below outlines data disposal periods for individuals and whether information should be kept on file permanently. Keep in mind, both manual and computer records have the same required retention period.

Individual Records

• Bank statements, including reconciliations and deposit slips
        Retention Period: 7 years

• Checks (canceled — see exception below)
        Retention Period: 7 years

• Check cancellations for important payments (taxes, purchases of property, special contracts). Checks should be filed with paper pertaining to the underlying transaction
        Retention Period: Permanently

• Contracts, mortgages, notes, leases
        Retention Period: 7 years after expiration

• Deeds and bills of sale
        Retention Period: Ownership period plus 7 years

• Garnishments
        Retention Period: 3 years

• Insurance records, current accident reports, claims
        Retention Period: Permanently

• Investment records
        Retention Period: Ownership period plus 7 years

• Notes receivable ledgers and schedules
        Retention Period: 7 years

• Property records, including costs, depreciation schedules, year end trial balance, blueprints and plans
        Retention Period: Ownership period plus 7 years

• Retirement and pension records
        Retention Period: Permanently

• Tax returns and worksheets, revenue agents’ reports, other documents relating to determination of income tax liability
        Retention Period: Permanently

Shred it!

If you’re still stuck on the question, “to shred or not to shred,” contact a trusted CPA. At Pittman & Brooks, we can help walk you or your small business through retention periods, shredding best practices, and more.

When you’re ready to declutter the home office or cubicles in an eco-friendly way, attend Pittman & Brooks’ annual client shredding event. Through a partnership with Shred-It, you can safely dispose of all your confidential materials and there is no limit to the number of bags or boxes you can bring. Contact us at info@pittman-brooks.com or call 503.684.9233 for details on the next shredding event.