Every business owner knows to keep track of their financial documents for their records, but what about documents pertaining to clients, employees, and partners? These papers are just as important for your records, and, in many cases, legislation requires you to hold onto them for a specified period of time. Keep reading to learn more about the statutory retention period for records.
What Is a Statutory Retention Period?
Business owners have obligations to retain and safely store records. Whether documents have information related to clients, employees, partners, or other important areas of the business, business owners must store these records for certain periods of time to meet specific criteria. This is known as the statuary retention period. Federal and state legislation requires these periods so that businesses and related parties can verify transactions concerning taxes, commercial law, and more.
What Are the Retention Periods for Each Document Type?
Every business document has a distinct retention period. There are some documents, such as titles, permits, leases, deeds, and more, that business owners should keep forever. Other documents have much shorter retention periods, such as certain materials related to previous employment. For example, signed documents, employee contracts, and handbooks are safe to dispose of after one year. However, there are other employee records, such as payroll and timecards, that you should keep for up to seven years for tax purposes. Understanding statutory retention periods is key to maintaining important records for the appropriate amounts of time.
What Should You Do After This Period?
Not every business needs to hold onto every record forever. In fact, storing too many outdated documents can clutter your filing system and make it more difficult to access the files you need. This is why it’s helpful to organize your filing cabinets at least once per year, allowing you to weed out any documents past their periods of retention. Always use a high-security personal paper shredder to destroy records before disposing of them to ensure information safety. Even outdated documents still hold personal and confidential data, meaning proper disposal is crucial.
Once you have a better understanding of the statutory retention period for records, you can better organize your business to ensure you retain all the documents you need. Once these files become outdated, be sure to dispose of them with secure methods, such as high-quality shredders from Capital Shredder.