Accumulating records and documents can pose a dilemma for individuals and 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. Thus, understanding the record retention guidelines and how long you should keep certain important documents is crucial to avoid these issues.
As an industry leader in
records storage, we understand that compliance with business record retention guidelines goes further than storing documents. You must store them in the right way. While records storage may not be as complicated for small businesses, you still need a plan.
This guide will introduce you to record retention guidelines and provide a handy record retention guidelines 2023 downloadable PDF to serve as your compliance checklist.
Federal Record Retention Guidelines: Important Agencies
Several acts, agencies, and laws define federal digital and paper retention guidelines. Generally, the rule under federal data and document retention guidelines for businesses is that all documents must be stored (in years):
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?
Your state and local government may also have its own record retention guidelines for individuals and businesses 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.
Breakdown: Record Retention Guidelines for Businesses
File retention guidelines for businesses are split into different series. Figure out which area individual documents fall into for a rough idea of how long you need to keep those records.
Here is a breakdown of 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 |
Breakdown: Record Retention Guidelines for Individuals
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.
Again, here is a breakdown of different 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. For example, your lawyer may recommend keeping all joint real estate investment records forever in case you experience a divorce later in life.
As with document retention policy guidelines for businesses, retention periods remain the same for physical and digital documents.
View the Entire Records Retention List Here
Do you need to build up record retention guidelines to cover your business? You may need to know the document retention guidelines for nonprofits.
Ensure you remain compliant with federal guidelines. To learn more, view the entire list here and secure your future.
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. Every great plan deals with contingencies in stride and adjusts to achieve the desired outcome. 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.
Familiarizing yourself with various data privacy and security policies, including
GDPR and
CPRA, will help you to build the infrastructure that works for you.
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 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 – this gives you a great start at gaining and keeping control.
Every business will have its own setup for categorizing and segmenting its physical or digital data. Create your own system 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.
In many cases, there is no need to hire a consultant. Instead, your usual accountant or legal counsel should 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 you must keep 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.
Examples include having clearly defined policies for who can access that information and taking steps to ensure this hierarchy is adhered to.
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 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 disposal 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.
Get Your Records in Order
Records storage is crucial to doing business. Adhering to record retention guidelines is vital for complying with the law and preventing severe financial penalties and business disruption.
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.
