Every business needs their own DRP (document retention policy), but every company is different and needs a DRP made specifically for their needs. The National Federation of Independent Business (NFIB) document retention guidelines are the best place for each company to start. Following these guidelines requires you to ask: Which documents do we need to keep and how long do we need to keep them? It doesn’t have to be detailed—in fact, a simple plan is more likely to be successful—but it must be followed. Use this 6-step guide to create your own document retention policy.
Step 1: Identify the Person in Charge of Your DRP
Choose a DRP manager who’s in charge of ensuring every employee understands and follows the policies you set forth. Generally, a senior employee is best because they’ll have the authority to enforce your policies. They’ll be responsible for implementing the DRP, which includes educating all employees about the policy, ensuring retention guidelines are followed, storing documents, and maintaining documents.
They will also need to suspend the DRP for certain documents in the case of audits or litigation. For example, if a previous employee files a lawsuit against your company, the DRP would need to be suspended in relation to documents relevant in the lawsuit.
Step 2: Identify Both Physical and Electronic Documents Your Company Produces
Depending on the nature of your business, your DRP will involve a variety of documents. Make sure you’re compliant with the regulations for all relevant documents.
Some of the most common documents the NFIB may require you to include are as follows:
- Employment documents
- Employee documents
- Employment taxes
- Training manuals
- Workplace documents
- Safety documents
- Maintenance records
- Product manuals
- Travel schedules
- Delivery schedules
- Accounting and corporate tax records
- Tax returns
- Gross receipts
- Customer records
- Expense receipts
- Travel expenses
- Transportation expenses
- Entertainment expenses
- Gift expenses
- Legal records
- Real estate records
- Administrative penalties
- Legal pleadings
- Insurance policies
- Government paperwork
- Vehicle registration
- Electronic records
- Computer discs
- Hard drives
- Web pages
- General forms of media
- Audio recordings
- Promotional materials
Step 3: Decide How Long You Need to Keep Documents
There are several things to consider when deciding how long to keep various documents. The National Federation of Independent Business guidelines suggest different time frames for different types of documents.
They suggest you consider the following in your decision:
- Legal requirements: Take a look at your state, federal, and local laws to see how long they require you to keep various documents for audits, lawsuits, and other purposes.
- Statute of limitations: The statute of limitations varies state by state for both civil and criminal matters.
- Uses for various documents:
- Supporting or disproving legal claims
- Supporting tax deductions, expenses, etc. in case of audits
- Explaining business decisions
- Preparing your company for future expansion
- Reproductions: A successful DRP must not just cover original documents—it should cover reproductions as well. If your DRP calls for the destruction of some documents but not all, then courts may not rule that your DRP is reasonable. Consider which of your documents can be stored electronically via eFileCabinet. If it can be easily saved electronically, then there’s no reason to keep a paper copy. Note that copies of contracts with original signatures generally do not hold the same weight as an original copy.
- Litigation suspension: If your company has reason to believe a lawsuit is likely, then you don’t want to destroy any documents relevant to said lawsuit. Stop the shredder and immediately let your employees know that they must stop destroying documents pertaining to the case—including electronic copies.
Step 4: Decide How Documents Should Be Stored in Accordance with NFIB Document Retention Guidelines
There are 4 main factors to consider when deciding on a storage method:
- The cost of storage
- The space you have available for storage
- How difficult it is to retrieve the information you need
Most companies use a combination of both paper files and electronics files. These days, almost all documents can be saved via eFileCabinet, where they will be safe, secure, and easy to retrieve. However, remember that items with original signatures, like contracts, should also be saved.
Step 5: Decide How Documents Should Be Destroyed
Paper documents must be destroyed in such a way that they’re unreadable. Shredding is a popular choice for paper files, and in most cases, deleting and emptying your recycling bin is enough for electronic data. Keep in mind that online documents are often saved in numerous places and you’ll need to delete them everywhere they appear.
Step 6: Have a Plan for Enforcing Your DRP (Document Retention Plan)
It’s the job of your DRP manager to make sure employees read and understand your DRP as it pertains to them. Remember that DRPs serve many purposes—including reducing storage space, making documents more accessible, and ensuring professionalism—and that selectively following your DRP can open you up to litigation.
Storing electronic files in one place—where all employees who need access can access them—is the most cost-effective option, and it makes it easy to delete documents on schedule. eFileCabinet provides solutions to these problems and many more.