Every business accumulates mountains of paperwork over the years. From tax returns and employee files to vendor contracts and client correspondence, knowing how long to keep each type of document is essential for staying compliant with federal and state regulations. Holding on to records too long wastes valuable storage space and increases your exposure to data breaches. Destroying them too early can land you in legal trouble or leave you without critical documentation during an audit.
This guide breaks down the most common retention requirements so you can confidently determine when it is time to schedule professional document shredding services for your outdated business records.
The Internal Revenue Service provides the most widely referenced retention standards for business records. According to IRS Publication 583, the general rule is to keep tax records for at least three years from the date you filed your return or two years from the date you paid the tax, whichever comes later. However, several situations extend that timeline considerably:
For most small and mid-sized businesses, keeping tax-related documents for a full seven years is the safest approach. This covers the longest standard audit window and gives you peace of mind that you are never caught off guard by a late inquiry from the IRS.
Federal employment laws set various retention requirements depending on the type of record. The Equal Employment Opportunity Commission (EEOC) requires employers to retain all personnel and employment records for at least one year from the date of termination. Under the Age Discrimination in Employment Act (ADEA), payroll records must be kept for three years. The Fair Labor Standards Act (FLSA) mandates that records relating to wages, hours, and conditions of employment be preserved for three years.
In Massachusetts, the state's wage and hour laws align closely with federal standards, but employers should also be aware that records related to workplace injuries under the Massachusetts Workers' Compensation Act should be retained for the duration of the claim plus additional time beyond its resolution.
Business contracts should generally be kept for the duration of the agreement plus six to ten years afterward. This covers the statute of limitations for breach of contract actions in most jurisdictions. In Massachusetts, the statute of limitations on written contracts is six years, which means retaining executed contracts for at least six years past their expiration is advisable.
Lease agreements, loan documents, and promissory notes follow a similar pattern. Keep these records active until the obligation is fully satisfied, then hold them for an additional six years before scheduling their secure destruction.
If your business handles any form of protected health information (PHI), HIPAA regulations require that you maintain documentation of your privacy policies and procedures for six years from the date they were last in effect. Patient medical records themselves are governed by state law, and Massachusetts requires healthcare providers to retain adult patient records for a minimum of seven years from the date of the last patient encounter.
Because medical records contain some of the most sensitive personal information in existence, they absolutely must be destroyed through a certified shredding process rather than simply thrown in the recycling bin.
Bank statements, canceled checks, deposit slips, and financial statements should be maintained for at least seven years. This timeframe covers the IRS audit window and also satisfies most compliance requirements under the Sarbanes-Oxley Act for publicly traded companies. Private businesses benefit from following the same standard as a matter of best practice.
Massachusetts General Laws Chapter 93H imposes strict obligations on businesses that own or license personal information of Massachusetts residents. Under the state's data breach notification and disposal regulations, companies must securely destroy records containing personal information when they are no longer needed for business purposes. Failure to do so can result in fines and penalties. Businesses throughout Springfield, MA and the greater Pioneer Valley region trust Valley Green Shredding to handle this process in full compliance with state and federal law.
Once your documents have passed their required retention period, do not let them sit in storage indefinitely. Every box of old records represents a potential liability if the information falls into the wrong hands. Professional document shredding ensures that sensitive data is rendered completely unrecoverable through cross-cut industrial shredding, and that you receive a Certificate of Destruction as proof of compliant disposal.
Valley Green Shredding is NAID AAA Certified and provides both on-site mobile shredding and scheduled container service throughout Western Massachusetts. We recycle 100 percent of all shredded material, making secure destruction the environmentally responsible choice as well.