Which Documents to Keep and Which to Shred: A Practical Business Guide

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Which Documents to Keep and Which to Shred

Managing business documents isn’t about keeping everything forever. It’s about aligning retention with compliance, risk management, and operational needs — then securely destroying records when their lifecycle ends.

Without a structured approach like a documented records lifecycle management process, businesses often:

  • Store boxes indefinitely
  • Purge records reactively during audits or office moves
  • Expose themselves to unnecessary risk

Companies can face penalties for both keeping records too long and destroying them too soon. The key is balance.


Why Proper Document Retention Matters

Proper document retention helps your business:

  • Stay compliant with federal and state regulations
  • Remain audit-ready
  • Reduce legal exposure
  • Lower storage costs
  • Protect sensitive information

Retention without a schedule increases risk. Over-retention increases breach exposure. Premature destruction increases compliance risk.

A disciplined retention strategy supported by secure offsite records storage ensures that inactive records are preserved appropriately until destruction eligibility.


Common Retention Timeframes (with Sources)

Below are widely recognized federal retention guidelines.

Tax & Financial Records

Employment Tax Records

Payroll Records

Employee & HR Records

These timelines form the foundation of a formal retention schedule.


Documents Most Businesses Should Keep

Retention needs vary by industry, but most organizations maintain these core categories.

Financial & Tax Records

Retain according to IRS statute-of-limitations norms:

  • Tax returns and supporting documents: 3–7+ years
  • General ledgers
  • Bank statements
  • Expense documentation
  • Audit reports

Inactive financial files that must be retained but are rarely accessed are ideal candidates for secure offsite storage rather than occupying expensive office space.

Employee & HR Records

Employee documentation is heavily regulated and often sensitive. Examples include:

  • Employment agreements
  • Payroll documentation
  • Benefits records
  • Termination documentation
  • I-9 forms

Proper classification and secure storage reduce audit risk and protect employee privacy.

Certain documents may require permanent retention:

  • Articles of incorporation
  • Board meeting minutes
  • Intellectual property filings
  • Long-term contracts

These often qualify for long-term preservation solutions, including climate-controlled vault storage when environmental stability is required.

Industry-Specific & Regulatory Records

Healthcare, financial institutions, government entities, and energy companies often face stricter retention mandates. In these environments, combining structured records retention policy retention policies with records management solutions helps support compliance and defensibility.


Documents That Should Be Shredded

Records should be securely destroyed when:

  • They have met their retention requirement
  • They contain sensitive personal or financial data
  • They no longer have operational or legal value

Examples include:

  • Expired contracts past retention
  • Duplicate records
  • Draft documents
  • Outdated financial files
  • Old HR records beyond compliance requirements

Not sure how long your specific documents should be kept? Download our comprehensive Record Retention Schedule Guidelines to get a structured, easy-to-follow framework you can apply across departments.


How Long Should You Keep Business Records?

Here is a simplified reference. Retention should always be confirmed based on your industry, state laws, and legal counsel.

Record Type Typical Minimum Retention
Tax returns 3–7 years (IRS)
Employment tax records 4 years
Payroll records (FLSA) 3 years
Employee personnel files ~7 years (best practice)
Contracts ~7 years after expiration
Corporate formation documents Indefinitely

For a more defensible program, align your policies with a documented records retention schedule.


The Risk of Keeping Documents Too Long

Keeping everything “just in case” increases:

  • Data breach exposure
  • Legal discovery risk
  • Storage expenses
  • Retrieval inefficiencies

Inactive records should not consume valuable office space. Many organizations reduce risk and cost by moving inactive files to secure offsite storage facilities.


The Risk of Shredding Too Soon

Premature destruction can result in:

  • Audit failure
  • Regulatory fines
  • Litigation sanctions
  • Loss of legal defense documentation

Destruction should only occur when documentation confirms eligibility. This is where a documented chain of custody process and a certificate of destruction become critical.


How to Create a Records Retention Schedule

A strong retention schedule includes:

  1. Identifying record categories
  2. Determining legal and regulatory requirements
  3. Defining retention timelines
  4. Establishing secure storage practices
  5. Defining destruction protocols

Aligning retention with the broader records lifecycle management framework ensures records move from creation to destruction in a controlled, compliant manner.


When to Use Secure Shredding Services

Secure shredding is recommended when:

  • Records contain confidential or regulated data
  • You need documentation of destruction
  • You’re conducting a large purge
  • Compliance mandates secure disposal

Businesses often choose:

  • One-time purge shredding
  • Scheduled recurring shredding
  • Onsite shredding
  • Offsite destruction

Using a professional secure shredding provider protects your organization from unnecessary risk.


Frequently Asked Questions

Should digital records follow the same retention schedule?

Yes. Digital records should follow the same retention timelines as paper records and should be managed under a documented lifecycle process.

Can I throw old documents in the trash?

No. Confidential documents should always be securely shredded.

Should inactive records remain onsite?

Inactive records are typically better suited for secure offsite storage, freeing office space and reducing risk.

Is shredding required by law?

Many privacy and data protection laws require secure disposal of confidential information.


Final Takeaways

Deciding which documents to keep and which to shred requires structure, not guesswork.

A disciplined retention strategy helps you:

  • Stay compliant
  • Reduce legal risk
  • Lower storage costs
  • Protect sensitive data
  • Improve audit readiness

If your organization is unsure whether it is retaining too much or destroying too soon, it may be time to evaluate your retention and destruction strategy.

Corodata supports businesses with records lifecycle management, secure offsite storage, climate-controlled vault storage, secure shredding services, and documented chain of custody processes.

If you’d like to assess your current retention practices, reach out to learn how we can help you build a secure, compliant records strategy.