What is Records Retention? Determining Your Schedule, Policy, & Level of Compliance

Records retention for businesses and organizations is the process or system for managing confidential records, including developing a retention schedule and ensuring legal and regulatory compliance. Records and document management is crucial for meeting legal, operational, and compliance needs.

This article will explore the significance of records retention and how to create an effective schedule and policy. We will discuss legal compliance, data privacy and security benefits, how to develop a retention schedule for digital and physical documents, and how to create a comprehensive records retention policy.

What is Records Retention?

Records retention refers to an organization’s practices to protect and keep important documents for the required duration. This practice helps businesses store, access, and dispose of records effectively, meeting legal, operational, and compliance needs while promoting efficiency and responsibility. Record retention is necessary to keep important and valuable information safe, including documents and files.

The Role of Records Retention in Compliance

Records retention is also key for maintaining compliance with industry regulations (e.g., GDPR, HIPAA, SOX). Every industry has its own defined laws and regulations for how long various types of records, such as financial records, employee data, or environmental reports, must be kept, from storage to management rules.

By adhering to a strict record retention policy, you won’t have to worry about compliance issues that could result in legal penalties and reputational harm. To learn more about your industry-specific compliance needs, contact the records retention experts at Midway Document Destruction.

Why is a Records Retention Policy Important?

Implementing a formal records retention policy is vital for businesses. It effectively reduces legal risks, enhances data privacy, and improves operational efficiency, all while protecting personal and business information throughout its lifecycle.

Benefits for Data Privacy and Security

A data retention policy is also necessary to protect sensitive data from breaches or unauthorized access. Limiting the amount of stored data minimizes the risk of cyberattacks.

Legal and Regulatory Compliance Considerations

Specific laws and regulations govern records retention. For instance, IRS guidelines for data retention state that you must keep your records for three years from the filing date of your original return or two years from the tax payment, whichever is later if you’re filing a credit or refund claim. Hold onto those records for seven years if you claim a loss from worthless securities or a bad debt deduction.

While SEC requirements mandate that broker-dealer records be retained for at least three years, with the first two years easily accessible, this is specified in Rule 17a-4, which outlines broker recordkeeping standards.

How to Determine a Records Retention Schedule

Conducting a records audit is important to creating a records retention schedule that meets an organization’s needs. This audit helps identify all the records the organization generates and assesses their business value. Additionally, it involves determining legal retention requirements and effectively managing both digital and physical records.

Conducting a Records Inventory

Start by performing a comprehensive inventory of all records, including digital and physical formats. Ensure that records are categorized by type, as this will establish a solid foundation for an effective retention schedule.

Understanding Retention Periods

To determine record retention periods, consider legal requirements, industry standards, and business needs. Short-term classified data, like emails, can be automatically deleted, while long-term records, such as contracts, must be kept for several years before archiving or deletion.

Managing Digital vs. Physical Records

Digital data security is maintained through access controls and backup systems. Physical record retention can be challenging because of limited storage, damage risks, and retrieval issues, making secure storage essential.

Digital records use electronic systems and tools for seamless organization and efficiency, whereas physical records need to be indexed and labeled for quick and easy access.

Building a Comprehensive Records Retention Policy

Developing a comprehensive and actionable records retention policy must align with legal requirements, organizational goals, and employee engagement.

Key Elements to Include

Key components of a strong retention policy include precise retention schedules, designated responsibilities, and procedures for secure destruction.

Implementation and Employee Training

For a successful records retention policy to work, employee buy-in and training are a must, as this will support adherence to the policy. When rolling out the policy across departments, it should be organized, documented, and explained to employees the need and rationale behind it. Then, for continued compliance monitoring, establish a system to track policy, which can be automated using specific tools.

Best Practices for Records Retention

To enhance records retention efforts, organizations should adhere to best practices that improve compliance and efficiency, such as conducting regular policy reviews and ensuring secure document destruction.

Regular Policy Reviews

Regular reviews of the retention policy every one to two years will help address changing regulations and organizational needs. Conduct these reviews by assessing the effectiveness of the existing retention policy and identifying areas for improvement, evaluating current laws and regulations for compliance, reviewing recent operational changes, and getting feedback from all those involved in the records lifecycle.

Secure Document Destruction

It is extremely important to securely dispose of records that have reached the end of their retention period. Find the proper method of document destruction, such as shredding or incineration, that follows regulations to avoid non-compliance implications.

Partnering with Experts for Records Management

Partnering with professionals to manage your records retention policies can have significant advantages, including improved compliance and reduced risks. By collaborating with specialized companies like Midway Document Destruction, organizations can leverage their extensive experience in compliance, minimize risks through best practices, and utilize technology solutions for efficient storage, retrieval, and disposal of information.

Why Choose Midway Document Destruction?

Contact Midway for expertise in records retention, secure document destruction, and compliance solutions. Our professional and reliable data privacy and document destruction services simplify records management and give our clients peace of mind.

Discover our records destruction, management, and storage services now!