Managing documents is an essential part of any business. Shredding documents is a common practice to dispose of sensitive information and maintain privacy. While a shredder can make quick work of most things, some documents should never go to the shredder. Let’s explore five vital business documents, the information they entail, and why shredding them could lead to disastrous consequences.
1. Founding Documents
Founding documents include articles of incorporation, partnership agreements, and operating agreements. These legal documents establish your company’s formation and outline its structure. They also contain critical information about ownership, management, stock issuance, and general guidelines for decision-making. Destroying such documents could lead to legal disputes, confusion about ownership, and other complications hindering your business.
2. Tax Returns and Financial Statements
Tax returns and financial statements are essential records that reflect your company’s financial journey. They provide valuable information to stakeholders, such as investors, banks, and the IRS. Retain these documents for at least seven years, as the IRS may audit your business and require various pieces of information from you. Prematurely destroying these records could result in penalties, fines, or even criminal charges.
3. Employee Records
Accurate employee records—employment contracts, benefits information, performance evaluations, and payroll documentation—are vital for regulatory compliance. They ensure fair treatment and can resolve possible disputes. Some states in the US require businesses to hold onto these records for a certain time, even after an employee has left the company. Sending these documents to your large-capacity shredder could lead to compliance issues, legal disputes, or damage to your company’s reputation.
4. Intellectual Property Documentation
Intellectual property (IP) documents, such as patent applications, copyrights, trademarks, and trade secret documentation, are invaluable assets to your business. They prevent your ideas, innovations, and brand identity from being stolen or misused by competitors. Shredding these documents could result in lost IP rights, stolen ideas, and a poor competitive position in the market.
5. Legal Documents and Contracts
Legal documents and contracts—leases, licenses, non-disclosure agreements, and vendor contracts—are crucial to the smooth operation of your business. They define the relationships between your company and other parties, outlining each party’s rights and obligations. Shredding these documents could lead to disputes, litigation, and business disruptions that harm your reputation.
While it is necessary to shred documents to protect sensitive information, these five types of documents are too critical to destroy. To safeguard your business’s success, secure these vital documents. Implement a system that keeps critical records separate from those destined for the shredder.