Today we talk about another exciting and exhilarating part of running a business: record retention. Before you doze off, let’s talk about why record retention is important and can save you from a lot of headache and heartache later on.
When you start a business, there’s a lot of stuff that comes with it. At the end of the day, it amounts to a little more than a lot of paper, or data, or both. That’s where record retention, and a retention policy or guidelines, come in handy. Record retention is the amount of time a document needs to be kept or retained, whether it be electronic or paper. After the record retention time has been completed, the document can be destroyed.
Preemptively tossing a record can be a nightmare. Why? Well, for one thing, it’s required to retain records by law. Yep, there are federal and state laws which require businesses to have a record retention period, regardless of format. If a record is destroyed too soon, it can wreak havoc on your personnel (try doing your taxes or working with an internal auditor when you don’t have the right documentation) and could even result in fines or legal action … doesn’t that sound fun?
But don’t let the above scare you into thinking you should never destroy ANYTHING. Business records can be voluminous and bulky and, if you’re not careful, will make your business look like an episode of Hoarders. So how do you know when to keep it and when to toss it? Well, I’m glad you asked, because Eide Bailly has developed this handy sheet with record retention guidelines. Check it out!
The moral of the story? Don’t just throw it away, but don’t just keep it either. Rather, develop a record retention policy, using the above as a guide, to ensure that you have just the right amount of stuff as you progress within your business.