Lorem ipsum dolor sit amet, consectetur adipiscing elit. Vivamus convallis sem tellus, vitae egestas felis vestibule ut.

Error message details.

Reuse Permissions

Request permission to republish or redistribute SHRM content and materials.

After a business closes, what do we do with company and employee records?

When a business closes, federal, state and local record retention requirements are implicated; audits, tax returns and claims against the company often post-date the dissolution of the business, and records must be produced to respond to these issues.

The Internal Revenue Service's Closing a Business Checklist, many state employment development websites and the Small Business Administration's Steps to Closing a Business provide information to help business owners properly close their businesses. The following information provides additional guidance.

Organizations should start by determining which records must be retained and for how long. For general business records, including tax and payroll records, the professionals involved in the business will likely know retention requirements for their areas of expertise (e.g., the CPA will know retention requirements for tax records).  In addition to past business records, company closing records, such as the formal dissolution papers, should be retained.

The next step is to make a list of documents that must be retained and the corresponding retention requirement, and determine where the documents are to be kept (name and address of the responsible party). It is helpful to note if the documents are stored electronically or in hard copy format.

Addressing personnel files more specifically, review requirements for federal and state record retention. The most common employment records that may need to be retained could fall under such general categories as pre-employment, work history, wage and hour, taxes, welfare and benefits, health and safety, and separation of employment. See Complying with Employment Record Requirements.

If the business is closing due to an acquisition, it should verify that company records, including employee personnel files, are transferred to the new owners.

When consulting statutory or regulatory information, employers should note that published guidelines outline minimum retention periods. For example, Internal Revenue Service (IRS) record-keeping standards require employers to keep employment tax records for a minimum of four years after the date the tax was due or paid. For more record-keeping information, see IRS Publication 15 and IRS Publication 583. The Small Business Administration and many state statues of limitation recommend seven-year retention periods. Pending claims, such as workers' compensation or open litigation, require retention until the claim is closed.

After the record retention time frame expires, the records should be destroyed. Secure destruction of the records protects the personal information of the business owner and of the former employees.

Though purging files can be cathartic, indiscriminate destruction of company records could be harmful. Prudent employers will assess what, if any, employment or business claims/litigation might arise even after a business closes. Being able to provide relevant records can be one of the determining factors in successfully settling claims or winning lawsuits.


​An organization run by AI is not a futuristic concept. Such technology is already a part of many workplaces and will continue to shape the labor market and HR. Here's how employers and employees can successfully manage generative AI and other AI-powered systems.