A document or records retention policy provides a formalized process to manage your organization’s physical and electronic records. A policy also ensures your organization complies with state and federal document retention and destruction laws. Should you face a lawsuit or investigation, you can easily reference relevant records to help support your case. Your records retention policy also improves efficiencies, making it easier to locate and share documents as needed. Here we provide a comprehensive overview of document retention policy best practices to protect your data and improve compliance.
How long is your business required to maintain records?
Records retention policies and schedules are influenced by document type and record retention laws by state. Document retention guidelines use storage periods based on one, three or seven years with a category of records that must be retained “forever.” We provide state record-keeping agency links below that can advise on the specifics for your industry. However, to get you started, we’ve categorized document types and listed them based on the years of retention required:
- Correspondence with customers and vendors
- Deposit slips
- Purchase orders and receiving sheets
- Stenographer’s notebooks
- Stockroom withdrawal forms
- Employee personnel records and applications
- Expired insurance policies
- Internal audit reports
- Petty cash vouchers
- Physical inventory tags
- Savings bonds registration
- Employee time cards
- Accident reports and claims
- Accounts payable/receivable ledgers and schedules
- Bank statements and reconciliations
- Canceled checks, stock and bond certificates
- Employment tax records
- Expense analysis and distribution schedules
- Expired contracts and leases
- Inventories for products, materials and supplies
- Payroll records and summary
- Sales records
- Subsidiary ledgers
- Travel and entertainment records
- Vouchers for payments to vendors, employees, etc.
Do Not Destroy
- CPAs/accountants audit reports
- Bills of sale
- Canceled checks
- Cash books
- Charts of accounts
- Current contracts and leases
- Corporate documents
- Depreciation schedules
- Financial statements
- Investment trade confirmations
- Legal records and correspondence
- Minutes books for directors’ and stockholders’ meetings
- Property appraisals and records
- Retirement and pension records
- Trademark and patent registrations
Period of Limitations for Business Tax Returns
Records for tax returns are saved based on periods of limitations. If you file a claim for a credit or refund after your return, you should keep records based on the later date, either three years from the date you filed your original return or two years from the date you paid the tax.
Employment tax records are maintained for at least four years from the date the taxes were either due or paid, whichever is later. If you have income that is more than 25% of the gross income you reported on your return but that you did not report, records should be kept for six years. If you do not file a return for any given year, do not destroy those records until you file your return.
What determines document retention standards and practices?
Document retention is based on the type of document. There are several different governing bodies that dictate retention practices, including the following agencies:
- General Data Protection Regulation (GDPR) for personal information
- Internal Revenue Service (IRS) for tax audit procedures
- Fair Labor Standards Act (FLSA) for HR and employment laws
- Health Insurance Portability and Accountability Act (HIPAA) for medical records
- Employee Retirement and Income Security Act (ERISA) for documents related to employer-sponsored employee pension and welfare benefit plans
- Occupational Safety and Health Administration (OSHA) for labor-related injuries
However, there are also state and local document retention provisions to consider, as well as industry-specific regulations that might apply to your organization.
Best Practices to Comply With Record Retention Policy
Your Record Retention Policy should adhere to state, local, and industry standards. However, there are document retention best practices every organization should adopt to create a comprehensive policy, including:
Research Applicable Laws
Because there are so many governing bodies involved in record retention standards, it is important to research all document retention laws that apply specifically to your organization and industry. You want to ensure you include all legal obligations in your record retention policy.
Identify Business Needs and Archiving Solutions
Your own needs must also be addressed in your record retention policy. You want your policy to improve business-critical processes so you can leverage efficiencies related to document storage requirements. This is your opportunity to invest in a data management system that empowers your team to improve collaboration, customer service, protection of your intellectual property, and more.
Address All Data Types
Combine business needs with legal obligations to create data-specific policies. This ensures all stakeholders understand the length of time data is stored based on regulatory, legal, and corporate rules. This also avoids creating a mindset that all data must be retained forever. Saving unnecessary documents increases the risk of data loss and has a more significant impact in the case of data breaches.
Include a Data Backup Policy
Backing up data is critical to record retention. It ensures you remain compliant while reducing the risk of data loss. Having a clear procedure for data backup ensures you maintain records for all data, so you experience limited disruption following a catastrophic event.
Record Retention Guidelines and Laws by State
To help create your records retention policy it is best to start by reviewing your state records retention policies and schedules. You can find links to record retention laws and best practices by state below:
Should I seek professional help?
Yes, a document management solutions company will ensure you understand the compliance and retention schedules that apply to your organization. At MEDI, we have been offering document retention, destruction and data management solutions for over 40 years. We can help you develop a comprehensive records retention and destruction policy along with agile data management solutions to improve compliance and company-wide efficiencies. Speak with an expert today!