The appropriate time period for retaining documents belonging to Pennsylvania businesses can vary widely depending on the type of document, the applicable regulations, and the sector in which the business operates. Here are several general guidelines and specific legal requirements that businesses in Pennsylvania should consider:
Different Types Of Documents And Retention Periods
- Tax Records: The IRS requires that businesses keep tax records for at least three years from the date the tax return was filed or two years from the date the tax was paid, whichever is later. However, if there are claims for loss from worthless securities or bad debt deductions, records must be kept for seven years.
- Employment Records: For employment taxes, records should be kept for at least four years after the date that the tax becomes due or is paid, whichever is later. The Fair Labor Standards Act requires employers to keep payroll records for three years.
- Bank Statements and Financial Records: It is generally advisable for businesses to keep these documents for at least seven years, reflecting the statute of limitations for many types of lawsuits in Pennsylvania.
- Contracts and Leases: These should be retained for at least as long as the agreement is active, plus an additional period following its expiration or termination, commonly four to seven years, depending on the statute of limitations for contract disputes in the state. The two statutes of limitation in Pennsylvania that are of most interest to businesses are located at 42 Pa.C.S.A. §5525, governing the time for bringing actions on most contracts, and the Pennsylvania Commercial Code at 13 Pa.C.S.A. §2725, governing the time for bringing an action for breach of contract for the sale of goods. Both statutes provide a four-year statute of limitations period.
- Corporate Documents: These documents, including articles of incorporation, board meeting minutes, bylaws, and resolutions, should be retained permanently.
- Insurance Documents: Policies, claims, and related documents should be kept for the life of the policy plus several years (commonly three to seven years), depending on potential claims.
- Real Estate Records: Documents related to real property or real estate transactions should be retained for as long as you own the property plus an additional period (often seven years), which accounts for the statute of limitations on property claims or fraud.
- Regulatory Compliance Documents: The duration of these documents can vary greatly depending on the industry. For instance, environmental records might need to be kept indefinitely, while health and safety records could be required for a specific period after employment.
Businesses must also consider if local regulations or specific industry requirements apply, which might dictate more extended retention periods. For instance, businesses in the healthcare sector must comply with HIPAA regulations, which have specific requirements for the retention of medical records.
Takeaway
Businesses should consult with a local attorney experienced in business law to ensure compliance with state and federal regulations. This helps protect against legal risks and ensures operational compliance. Jones, Gregg, Creehan, and Gerace have highly skilled business law attorneys who can protect your interests and ensure your business complies with document retention requirements. Contact us today.