How To Create A Records Retention Schedule? (Free Downloadable Guide)

Starting a small business or running a larger corporation heaps tremendous responsibility on your shoulders. With over 10.5 million small businesses formed since 2021, it’s easy to forget your internal data security.

Developing a records retention policy is essential to complying with your legal requirements and keeping your secrets safe. But what are your compliance requirements, and what are the fundamentals of a file retention policy?

Here’s everything you need to know.

What is a Record Retention Schedule?

Your record retention schedule is the core document within your records management program. This policy document defines how long you should keep important documents, categorize different document types, and set a retention period.

The purpose of this document is to ensure that your employees adhere to your company’s policies. As a document defining the company’s legal authority to retain and purge records, this is the beginning of systemically organizing and developing your records management process.

According to CIO.com, timely data deletion is your “greatest defense” against hackers. However, don’t underestimate the impact of malicious activity. Corporations are no longer the sole target of malicious actors worldwide.

Small businesses are common targets. One scary statistic is that 60% of small businesses that get hacked go out of business within half a year.

Regular data purging from the moment your legal retention obligations elapse will enable you to comply with regulations that comply with medical regulations like HIPAA, the IRS, and various state and federal laws.

There’s also the issue of efficiency. A record retention schedule for businesses brings order to the chaos and prevents you from drowning in data.

Are there Risks in Not Having a Records Retention Policy?

Every company needs a record retention schedule. This is not a luxury or an optional add-on. Companies that fail to adhere to document retention policy best practices take on additional risks, including:

• Non-Compliance – Generally, best practices state that documents must be kept for one, three, or seven years, with some remaining forever. Non-compliance can lead to severe penalties.
• Inefficiencies – The world generates 2.5 quintillion bytes of data daily. With businesses creating more data than ever, a lack of a business records retention schedule will make identifying and locating critical documents more difficult as time goes on.
• Increased Breach Risk – More data also means an increased risk of inconsistency and irregularity. Breaches are more common among physical documents and digital records when more data is present within unwieldy databases.

So, now that you know the risks associated with allowing your Human Resources (HR) department to manage data without any guidance, what are the benefits of developing a record retention schedule?

• Improve how you utilize your resources.
• Control exponential growth of data volume.
• Demonstrate your compliance with state and federal regulations.
• Adopt a consistent approach to recordkeeping.
• Make it easier to locate and retrieve specific records.
• Reduce the risks of falling victim to litigation.

Record Retention Schedule for Businesses – Step-by-Step

So, what is a retention schedule in action?

In this guide, you will follow Company X’s actions as it figures out its records retention schedule template and goes about overcoming the challenges of creating and implementing this initiative.

1. Start with Inventorying your Documents and Records

Company X needs to know what records it has. This is a time-consuming process for an established business, so it’s always recommended that your document retention schedule begins from day one.

However, Company X’s founder failed to do that, so they must start from scratch. Inventorying must answer the following questions:

• What records do we have?
• Where are these records stored?
• Are they physical or digital?
• How long do they need to be kept?

Taking a meticulous approach to inventory will provide a benchmark to reduce unnecessary records, streamline your document management processes, and identify which records must be maintained for compliance and how long they must be maintained.

2. Create the Retention Schedule and Policy

The second step of your records management process is to create a retention schedule. Note that your schedule should be universal to prevent inconsistencies across business units.

Download your FREE Business Records Retention Guide today!

Company X should begin by structuring their schedule around a classification scheme. Proper categorization can fit records into broad groups to improve consistency and prevent creeping micromanagement.

Simultaneously, Company X needs to set retention periods. Pinpoint different records’ legal and operational value and choose the longer date. Maintaining a citation for each legal authority for each group, such as tax, HR, and healthcare, will quicken this process.

With this in mind, Company X must centralize its destruction scheduling. While its CEO may be tempted to outsource the problem to individual departments, this is a recipe for inconsistency, and accidental deletion can be disastrous.

Apply destruction scheduling using a standardized coding system, using the classification system you defined earlier. Your coding system will define the destruction date, which can also be automated using specialized dashboards.

As with every other step, Company X should communicate its new document retention schedule across the company.

3. Implement It

With a corporate records retention schedule, the final step for Company X is to commit to a full-scale rollout.

Remember, data retention policies aren’t optional add-ons. Instead, they must become an integral part of the business’s infrastructure. A communication campaign will lay the groundwork, but the same message must be communicated constantly.

The work still needs to be done now that Company X has rolled out a basic record retention schedule. All policies must be reviewed every 18 to 24 months to ensure they are functioning as they should.

It also allows managers to highlight compliance levels and make suggestions for improving the program.

Document Retention Policy Best Practices

Too many companies have implemented retention policies on paper, but the reality is different in practice. Eventually, enthusiasm levels wane, and these policies find themselves on the back burner.

It might not seem like a big deal, but without precise management and review systems, a lack of an enforceable retention policy will come back to bite you.

Company X decides not to become one of these companies, so they implement the following best practices.

1. Have a Clear Policy in Place

Did you know that poor communication causes 70% of corporate errors?

Clear policies ensure that your records are handled correctly. Mistakes can cost you fines, loss of reputation, and data breaches. Every employee plays a part in your record retention schedule, so ensure you have clear guidelines.

For example, does every manager know how to handle records when they reach the end of their lifecycles?

Company X ensures employees receive annual reinforcement to keep their policies crystal clear.

2. Regularly Review the Retention Schedule

Retention schedules are fluid, so Company X knows it must regularly review its schedule. Remember, legal and business regulations constantly change, as does the threat of data breaches.

Annual or biannual reviews can ensure that your retention policy remains on track. Some of the benefits of regular reviews include:

• Evaluating the policy’s effectiveness
• Rating internal compliance
• Becoming aware of substantial changes

3. Consistency is Key

The ideal record retention schedule is broad and avoids creating micro-categories or department-specific policies.

Treat your policy in the same way as you would treat your data security policy. Without consistency, your policy can quickly create confusion as departmental leaders strike out alone.

If Company X enforces consistency, it can enjoy the following:

• More cost-effectiveness
• Increased efficiency
• More transparency

4. Train Your Workforce

One of the biggest misconceptions about document retention is that it’s an abstract concept. In reality, the exact opposite is true.

It requires close attention and regular action to maintain its sharpness. To achieve that, Company X must invest in training its workforce, which includes top-level managers, departmental heads, and individual employees.

With a company-wide effort, consistency and compliance become possible.

5. Have a Secure Storage and Disposal Plan

Knowing when to store and dispose of records is one thing, but how can Company X dispose of records securely?

Several methods of data destruction exist, including shredding and hard-drive destruction. While organizations like Company X may have their own methodologies for data disposal, it’s often easier to outsource the problem to organizations like Corodata.

Outsourcing to a licensed data destruction specialist ensures that data is disposed of correctly, and you will receive a Certificate of Destruction (COD) to prove it.

Common Mistakes to Avoid

Growing pains are a reality with any new policy, but if you’re Company X, you want to avoid the consequences of failure.

So, what are the most common mistakes to avoid?

• Lack of proper indexing and classification
• No consistency in your schedule
• Not digitizing vulnerable paper documents
• Improper data disposal
• Lack of knowledge regarding legal regulations
• Not having a secure chain of command

The best record retention schedule is fluid, flexible, and matches the needs of your business. These schedules may seem like a headache, but they are an asset to your organization.

How to Read a Record Retention Schedule

Every company can decide how it wants to record its retention schedule. But every business will have several components in common.

This short guide will teach you what every record retention should contain.

• Coding System – The first step is to create a coding system corresponding to various data categories. Ideally, this should appear as a reference list appended to your retention schedule. Each record type will receive a code that defines what it is, its lifecycle, its importance, its format, and where it is stored.
• Records Description – A basic description explaining what each record is. For example, is it an IRS tax return or an employee’s medical record?
• Record Storage – Where is the record stored? Is it a digital or a paper document? Codifying these other devices can also support easy retrieval using a filing cabinet or an external hard drive.
• Retention Period – Every document will have a retention period defined by its legal or operational value. Its ideal retention period must be clearly stated.
• Disposal Instructions – How will each record be disposed of? Depending on its value and its format, disposal instructions may differ.
• Authority – Who is responsible for the retention schedule? Each type of record or category may be assigned to a different position of responsibility, especially in larger companies.

These essential components outline everything someone needs to know about a record retention schedule. Naturally, companies can format their schedule however they see fit, but these components must remain for a policy to be considered comprehensive.

Download Our Records Retention Schedule Sample

Staying organized and compliant in the fast-paced business world is easier said than done. To help you understand current record-keeping laws, Corodata has developed a records retention schedule template to act as your master document.

Make creating your record retention schedule a breeze by downloading our free template today.

Bottomline

Do you know what you should be keeping and for how long? Unfortunately, a surprising number of businesses need help with this aspect.

Developing a schedule informs you and your team with everything they need to know about which records must be retained, how long, and how to dispose of them. At Corodata, we believe that data is a double-edged sword, but with firm policies, you can increase compliance, efficiency, and organization at home.

Talk to us about our records management services to simplify handling your data assets today.