Document Retention Guidelines for Business Owners

Document retention describes the way a business stores and uses data, and for how long it is maintained. In many cases records are required to be retained for tax or legal reasons, but most businesses will also have operational reasons that make it worthwhile to take the time to define your strategy for what to keep, how, and for how long.

Choosing a Method

There are many options available for record storage, from old-fashioned paper documents to advanced electronic document management systems. Electronic systems are usually more reliable and secure than physical paper documents, but there may still be some applications where paper makes sense.

When deciding how you’ll retain business records, consider a system’s:

  • Flexibility (Will it be able to adapt as your business needs change?),

  • Reliability (Are records backed up in the event of theft, damage, or loss of the originals?),

  • Security (Are records protected by physical and/or electronic controls to prevent unauthorized access to information?), and

  • Cost (As technology has improved, electronic storage of information tends to be more cost-effective than paper retention systems.)

Defining a Policy

Once you’ve chosen how you’ll store business records, you need to define what you’ll save, and for how long. It’s good practice to include each of the different types of information your business regularly handles. For each type, define how that data will be formatted and how it will be saved. When deciding how long to keep information, it’s wise to review any applicable statute of limitations for matters related to the information.

Be sure that your policy also defines how your system will be backed up, and set a reminder at regular intervals, say once per year, to review the policy and ensure it continues to meet the needs of your business. Timely destroying old information in accordance with your document retention policy is also prudent.

Schreiber Accounting and Advisory can help with these and similar questions with Outsourced Accounting services. All Outsourced Accounting engagements include regular meetings to discuss business management concerns such as these. Contact the firm for more information.

Material discussed is for informational purposes only. It is not to be interpreted as investment, tax, or legal advice. Individual situations vary, and this information should only be relied upon when coordinated with individual professional advice.

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