I have customer files dating back to when I started this company in 1991. From time to time previous customers will ask us to do some additional work and in those circumstances it can be helpful to review their original file. But for the most part, they take up a lot of space. I'm wondering how long the rest of you hang on to customer files?
A mistake I made was to not pay attention to changing storage media and changing operating systems. I used to store data on floppy discs. Then I think I did it on CDs'. For a while I had this Iomega-type floppy disc and there were also some pin drives.
Lots of these floppies are still around but none of my computers will load the old software anymore.
We were cleaning out the house and I found an old USB "A" drive (3 1/2" floppy). I plugged it into my laptop and found an old floppy hanging around and it read it. So if you have the drive you can probably convert the media
There are two issues, one is what is legally required, two what do you want to keep to service the customer in the future.
contracts, invoices 7-10 years
shop drawings paper, 7 years
shop drawings PDF infinite
finish samples 7 years.
If you keep payroll records with jobs well that's a whole other issue.
Arbitration or a lawsuit may take years to develop and when you need documents.
In a typical owner sues GC dispute, all subs get to "play", the ability to limit your exposure is based on the detail and documents you have.
IRS and state tax agencies, usually 7 years.
Most laminates are discontinued, finishes have aged, hardware has changed so from a service the customer standpoint not a lot of value other than matching but site visit is required
The 7 year date is one that I've known about, and since our customer files have both contract documents and project spec type information, I had thought that perhaps that would be a good benchmark. Eliminating anything prior to 7 years ago will allow me to empty half the volume of my file cabinets, so I think I'll use that approach. I appreciate your understanding and appropriate response.
We store lots of stuff digitally now-a-days, but 20 years ago...not so much. Every one of our customer files contains information on species, profiles, finish formulas, etc. This information has saved me dozens of trips to jobsites when, for example, a customer's dog ate one of their cabinet doors.
I don't think I'm up to the task of scanning hundreds of projects worth of data, but there is value in keeping it around. How much value is the question.
10/26 #12: How long do you keep customer files ...
I am not advocating that anybody scan old paper documents, that would be entirely too tedious and would yield very minimal benefit.
What I am doing, however, is flagging that whatever format you store your data in make sure it is retrievable later. If it is in banker boxes then put a label on the box. If it is based on CAD systems that may or may not be relevant later then maybe you want a PDF format.
Storage without retrieval is just landfill. It could be digital landfill but landfill nonetheless.
10/26 #13: How long do you keep customer files ...
I keep paper records on average 10 years. All files on computer, generated from those paper documents have all stayed in storage, as I have never needed to cleanse them. The Cds, and other files saved from my computer don't even fill up one of my drawers. By reducing the paper file folder down to the basic and critical information, 10 years worth only fills one shelf in my storage space. While I appreciate how valuable space is, information is extremely valuable and expensive to obtain a second time when I already have it in my hands. I do a lot of repeat business with my old customers. Saving old dimensions, paint colors with the brand, and knowing the profiles used on older work has saved me many thousands of dollars. I recently used the old files and sent mailers out to customers in that 8 to 10 year old range, and picked up several nice orders that I would have probably missed out on if I had not had that information.
10/27 #14: How long do you keep customer files ...
Anything that is digitized or can be digitized should be kept for your own business and marketing purposes. You collected the info, it cost you money to do it, why not retain it? It might be useful, as has already been mentioned.
7 years is absolutely meaningless as far as the IRS (and most any other tax agency) is concerned. If you file a Schedule C as part of an individual return, once 3 years has elapsed after the date you filed the return it's generally beyond what they can audit.
Same thing if filing as an S or C corp or LLC or whatever. Beyond 3 years after the return is filed generally equals no longer subject to audit.
For example, say you file your 2015 return on 4/15/16. Generally, after 4/15/19 the 2015 return will no longer be subject to audit.
Unless, of course, you've been busy committing some sort of fraud in the filing of any tax return, in which case there is no statute of limitation, fraud means open season on everything from the date the fraud started.
Or, you've gotten some sort of notice and/or signed some sort of tolling agreement that gives them more time to examine your return(s).
If you're honest and haven't committed any fraud in reporting your transactions or done anything that could possibly be construed to be fraudulent, you can generally junk anything 4+ years old. Or keep it all digitized just to be on the safe side.
I'm speaking in very broad generalities and this is not advice. Always consult your own professional tax counsel if you have any question about your situation.
10/27 #15: How long do you keep customer files ...
+1 to Pat's response. My niece went through an audit with her business a year or two ago and the audit is 3 years unless they find anything they can deem fraud. Then its 7, and likely as far back as they want to go but what they told her was "3 years unless they find fraud THEN 7".
I would ultimately like to store customer documents and especially color samples indefinitely but I dont think that it too realistic. I think most major shops I have ever read or seen are lucky to keep any physical samples for 5.
10/30 #17: How long do you keep customer files ...
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