Business Record Retention Guidelines: How Long Should You Keep Documents? (Free Download)

Understanding the business record retention guidelines and how long you should keep certain important documents is crucial.

Accumulating records and documents can pose a dilemma for businesses, as it can be difficult to determine how long to retain them before disposing of them. However, keeping records for too long can lead to cluttered spaces and excessive storage expenses, while disposing of them too soon may expose legal and financial risks.

Federal Record Retention Guidelines: Important Agencies

Several acts, agencies, and laws define federal digital and paper record retention requirements. Generally, the rule under federal data and document retention guidelines for businesses is that all documents must be stored (in years):

• One
• Three
• Seven
• Forever

Working with an accountant, lawyer, or data retention consultant should be a standard part of your workflow before shredding paper or destroying hard drives. The cost of non-compliance can be high, with financial penalties running into the millions.

So, at the federal level, which areas do you need to pay attention to?

• Age Discrimination in Employment Act (ADEA)
• Americans with Disabilities Act (ADA)
• Civil Rights Act of 1964
• Employee Retirement and Income Security Act (ERISA)
• Equal Employment Opportunity Commission (EEOC)
• Fair Labor Standards Act (FLSA)
• Family and Medical Leave Act (FMLA)
• Federal Insurance Contributions Act (FICA)
• Internal Revenue Service (IRS)
• Occupational Safety and Health Act (OSHA)

Your state and local government may also have its own business record retention guidelines that are stricter than their federal equivalents. In this case, the longer period always applies.

Note that the federal government may not handle some areas requiring record retention. For example, the Payment Card Industry Security Standards Council (PCI SSC) has its own standards for maintaining PCI compliance.

Record Retention Guidelines for Businesses

File retention requirements for businesses are split into different series. Here is a breakdown of business record retention guidelines for small businesses and large corporations by area:

Type	Example	Record Retention Period
Legal	Business formation records, deeds, trademarks, and ownership records.	Forever
IRS	Business federal tax returns	Seven years
Personnel	OSHA accident forms	Five years (up to 30 in some cases)
Payroll	Paystubs	Three years
Accounting	Financial statements and depreciation schedules	Seven years
Professional Documentation	Permits, insurance policies, and licenses	Until they are replaced
Banking	Bank statements, credit card statements, and canceled checks	Seven years
Hiring	Job advertisements and resumes	One year

Individual Record Retention Guidelines

In many cases, the same data retention guidelines applying to businesses also apply to individuals. For example, IRS retention guidelines do not change based on whether you are discussing a business or personal tax return. Below is a breakdown of the record retention guidelines for individuals:

Type	Example	Record Retention Period
Taxes	State and federal income tax forms	Seven years
Banking	Deposits, statements, and credit card statements	Seven years
Investment	Purchase slips, dividend statements, and mutual fund annual statements	Ownership period + seven years
Real Estate	Deeds, purchase documents, and mortgage statements	Three years
Retirement	IRA statements and retirement plan statements	Forever

These are some of the examples of different documents you may have at home. Note that some accountants and lawyers may suggest you keep certain types of documents forever.

As with business document retention guidelines, retention periods remain the same for physical and digital documents.

Business Record Retention Best Practices

Once you have determined the required length of time to store information, you now need to do it in a way that allows flexibility. In the arena of Retention Scheduling, the fundamental goal is to get control of the information in a way that you can revise the plan for whatever comes your way, including a litigation hold.

Record retention is a legal requirement and a beneficial endeavor to improve your business’s operations. Streamlining information retention allows easy access to records, prevents loss, and secures your operation against data breaches.

Determine Your Business Needs

Legal requirements are always a priority. For example, your accounting record retention guidelines will direct how such data must be stored and how long to keep records for.

But internal record retention guidelines must be designed to streamline your business’s processes and workflows. With more data available than ever, it is easy for data to become a drag on your growth.

Information is King!

Tracking the nature or type of information within a particular file (electronic or paper), box, or tape is the messy part of retention schedules. Destruction without a firm grasp of these details is more than risky, and it may even be criminal. Even if it is just basic information like Box 1, AP 2011, North American Div.

Every business will have its own setup for categorizing and segmenting its physical or digital data. Create your own convention for naming and recording each piece of data so that it can be easily found and secured.

Databases, not Lists

Managing multiple variables is best done with a database, not a log or spreadsheet, if you can avoid it. You will want to query multiple features, flag items for Litigation Hold, etc… (Corodata offers this tool free to our clients.)

Utilizing databases allows your business to easily search for, identify, and categorize data according to your internal guidelines. Some of the advantages of working within a database include the following:

• Efficiency – Databases are more adept at working with large amounts of data.
• Easy Updates – Databases allow you to make updates that reduce redundancy and improve reliability.
• Security – With data breaches becoming so prominent, using databases instead of lists lets you control access to information.

Enlist the Help of a Professional

Businesses can benefit from consultants who can discuss issues like IRS record retention guidelines for employers. Hiring a professional accountant to consult on matters like banking records retention guidelines provides insights into how you can store and secure vital documentation relevant to your situation. Your legal counsel should also have the skills and know-how to provide targeted suggestions for your organization.

Ultimately, record retention is a team effort requiring stakeholder buy-in across your organization.

Security Comes First

Federal record retention guidelines dictate more than just how long to keep business records. As a business owner, you are also responsible for securing that data and protecting consumer privacy.

For example, the Health Insurance Portability and Accountability Act (HIPAA) pertains to companies handling Protected Health Information (PHI). All companies within the healthcare sector must achieve and maintain HIPAA compliance.

The days of throwing employee records into a filing cabinet in the corner are long gone. Employee record retention guidelines state that businesses must take all reasonable steps to protect the exclusivity of the information within.

Invest in an Archiving Solution

Archiving platforms enable you to create custom record retention policies and automate many of the standard retention processes.

Saving time and effort enables you to redirect your human capital to other critical aspects of your business. Take advantage of record archiving solutions offering robust search functionality and built-in security features.

Start With the End in Mind

Once you are ready to implement a schedule, begin with the end in mind – when should the document be destroyed? Record it now, and plan to get it done on schedule. You should always double-check prior to shredding/destruction, but you are now managing a plan, not just reacting.

Document destruction also has its own rules and regulations. For example, under payroll record retention guidelines, you cannot throw a folder of physical documents into the dumpster outside your office.

Secure shredding and destruction are crucial for preventing data security and privacy guidelines. With the help of a professional data destruction service by your side, you have everything you need to ensure total ongoing compliance.

Please note that this information should only be used as a guide. You should consult with your legal team and insurance carrier when establishing a records retention policy. Your records retention policy should be updated annually as compliance regulations and requirements change.