The United States has a long history of preserving legal documents, but the government is now considering new regulations that would require businesses to keep records for at least seven years.
A record retention schedule for businesses is a document that outlines how long records should be kept. It allows for the organization to know when it’s time to destroy records and avoid any legal issues.
We all know, or should know, how important it is to preserve and protect our company documents. It’s simple to keep track of every paper, receipt, invoice, and company record when we first start out. However, after a few years, we discover that all of the documents we’ve been collecting are taking up more floor space in file cabinets than our own and our employees’ work areas.
The good news is that we don’t need to retain all of those documents indefinitely. Yes, certain things must be kept indefinitely. Some of them we retain just till the IRS has finished with us. Some of them we just need to maintain for a few years.
It’s a bit more difficult to figure out which documents must be maintained and for how long. And properly discarding temporary documents entails more than just throwing the papers in the recycle bin.
The Records Retention Schedule comes into play here. This document identifies the types of records your company creates (financial, personnel, employee handbooks, contracts, operations, meeting minutes, policy statements, online privacy statements… the list can seem endless); identifies any legal requirements for how long the record must be kept, as well as the requiring authority, such as the IRS or the Sarbanes-Oxley Act; and will note how long the record is kept.
You may find lots of information and examples regarding Records Retention Schedules on the Internet, like this one provided by Millennium Records Management. However, keep in mind that a sample schedule is just a generic depiction of how one could appear. Your Records Retention Schedule will be tailored to your type of business, location, what states and/or countries you do business in, whether you are privately owned or trade stock on the stock exchange, whether you are a public institution or have government contracts, and a variety of other factors.
To create and establish yours, you’ll want to engage with your accountant, legal counsel, and/or a professional records management firm.
You formally implement the Records Retention Schedule so that everyone in your business is aware of it. This makes it more likely that your essential data will be preserved in the first place. Assume you have a number of file cabinets full with Accounts Payable bills. According to your Retention Schedule, you should retain them for six years, but experience indicates that you only use them for three. Knowing this, you may free up space in your company or office by moving these documents to safe off-site storage or another suitable storage medium.
You may get rid of records that have reached the end of their retention term. But, as I previously said, you can’t just throw them in the recycle bin. You must have a procedure in place to dispose of them. To get rid of outdated papers, you will need to produce new documentation.
You’ll want the individuals who created the records to sign off that they don’t need them anymore. You should note that the records have reached the end of their retention term, as defined by your Records Retention Schedule, and double-check that it has not been extended due to audits, litigation, or other reasons.
You’ll need to record when, how, and who destroyed the papers. This is a lot simpler now than it was when I was lugging boxes down to the loading dock and putting paper into a shredder next to a trash. Mobile shredding businesses have exploded in popularity in recent years. They’ll bring their huge truck-mounted confetti shredders to your place of business, take your boxes to the truck, destroy them in front of your eyes, and provide you with a certificate of destruction.
Establishing, implementing, and adhering to a Documents Retention Schedule will go a long way toward ensuring that your firm retains and maintains the important records it needs to operate. And, in the worst-case scenario, if you find yourself in legal trouble, be able to show that your records are kept and destroyed in a regular, established, approved, and documented manner, rather than in a haphazard midnight burn behind the barn in an amateurish attempt to avoid culpability and responsibility or obstruct the legal process.
The record retention schedule contains is a document that outlines how long to keep records for your business. It also includes what data should be kept, and when it should be destroyed.
Frequently Asked Questions
What should the practice consider in establishing a record retention plan?
The practice should consider the following factors in establishing a record retention plan.
What is a retention schedule in document management?
A retention schedule is a list of documents that are important for an organization to keep.
Why is a records retention schedule prepared?
The records retention schedule is a document that outlines the record keeping requirements for an organization. It is prepared to help inform employees of the importance of maintaining records and how long those records must be retained.
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