How to Create a Record Retention Schedule for Your Business

Updated December 16, 2024

As your business grows, so does the associated number of records and documents. Organizing company records often takes a back seat to immediate employee, customer, or production issues which means many companies today still have metal file cabinets holding their company’s paper records - some dating back to the company’s founding. To minimize legal exposure, maintain compliance, and control access of information, it’s increasingly important for organizations to develop comprehensive record retention schedule.

Some areas of your business that likely need a better record retention strategy include:

• Legal documents
• Tax returns
• Personnel records
• Payroll information
• Accounting documents
• Bank statements
• Hiring records

Depending on your industry, you may also have things like patient records, vendor contracts, or customer financial documents to consider.

Six Strategies for Creating a Record Retention Schedule

1. Consult with the experts

When determining a record retention plan, it’s best to start with your company’s compliance and legal counsel to ensure you are establishing the appropriate cadence and minimizing any unnecessary risk. If your company is a member of a trade organization, there may also be legal and operational resources available to help you determine best practices for records unique to your industry along with any federal, state, and local laws.

2. Start your digital transformation

Make a plan to move your vital documents from a physical space to a digital space. Bulk document scanning services can facilitate the process of moving your paper records into an electronic records system. Doing so will make your records retention plan much easier and benefit your business in many ways.

• Secure documents electronically instead of maintaining paper records. You don’t need to worry about someone accidentally leaving a confidential paper document laying around or having access to a document they shouldn’t.
• Find documents easier and faster. If your employees need to spend time digging through file cabinets that aren’t organized clearly, they are wasting time that could be better spent on meaningful work.
• Improve your response to a disaster. In the case of natural disasters like floods, fires, and storms, your paper files are at risk. Your business may not be able to recover from losing all your important customer and legal records.

3. Establish organization and access parameters

Once files are digitized, it’s important to establish a clear organizational structure of the electronic documents along with outlining access restrictions. Through secure document management, electronic files should be indexed and accessible to those who have a legitimate work use for them or those who are legally required to access them. Record-keeping policies should also clearly outline the appropriate locations for different types of documents based on business process groupings, and access should be restricted to those file locations.

4. Create a records retention schedule

Establishing a record retention schedule serves as a company’s legal authority to retain and purge records. The records retention schedule for businesses should outline all types of records and how long those records are required to be retained. This can vary by type of industry, business unit, federal guidelines, and state guidelines. It’s up to each business, in consultation with their legal counsel, to create a record retention plan for each area of their company. Doing so establishes a “good faith” effort in ensuring a consistent records management program.

5. Purge records on schedule

A record retention schedule for businesses should include how and when documents will be destroyed based on the schedule outlined. In addition, it’s a good idea to have an auditing procedure in place to ensure the requirements are being followed correctly. Failure to purge documents on the planned schedule could open your company to unnecessary risk. If you destroy records too soon and are not able to produce them during an audit, you could risk fines. You can also incur more risk than you should in legal discovery by keeping records beyond their retention dates.

6. Review periodically

A record retention policy is dynamic and should be reviewed periodically (likely every 1-2 years) to determine if legal changes have impacted retention periods. Additionally, if business processes have changed, your record retention policy should be reviewed in accordance with those changes.

Start your digital transformation to improve your record retention

Moving away from paper-based processes and embracing a digital transformation may come with some hesitation. But they are necessary steps in developing a secure document management system and the coordinating record retention schedule that will ensure your business isn’t exposed to unnecessary risks.

Don’t feel overwhelmed. The team of digital transformation experts at EO Johnson can walk you through the process and help you get started.