A records retention schedule ensures that an organization keeps the records it needs for operational, legal, fiscal or historical reasons, and then destroys them when they’re no longer useful. You may base your records retention schedule on your own experience and research of legal mandates or on what other companies are doing.
Whatever your method, use your retention schedule as a guide, not as an executioner. Retain records longer if litigation, a government investigation or an audit seems likely. In the event that a legal action does transpire, immediately cease all disposal activities.
You have to know what you have and how long to keep it—legally and for your own business purposes—before you can establish an efficient records management system. That's why it's important to inventory your records and draw up a company retention schedule.
The retention schedule below reflects standard business practices. You must also consider state and local statutes of limitations as well as regulations of government agencies that pertain to your business. State retention statutes vary widely on tax, unemployment and workers’ compensation records, as well as on environmental and other requirements. Check with your state and regional authorities for details.
As an extra safeguard, have your CPA and your attorney review your records retention timetable before putting it into practice.