Document Retention Guidelines

Updated April 17, 2017

Carefully considered document-retention guidelines are important to any business, because good documentation can protect against tax and legal liability down the road. It takes time and thought to develop a good document-retention strategy.

Keeping Important Records

The motto "if in doubt, throw it out" may work well when cleaning the attic, but it's definitely not a good idea when it comes to document retention for business. Although most business owners understand the importance of retaining important records, many questions arise as to which records should be retained, and for how long.

No Set Answers

Complicating the issue is the fact that document-retention guidelines vary among industries. Third parties such as the Internal Revenue Service and other regulatory agencies often determine how long important records should be kept. The health-care industry, for example, is one for which there are extensive government guidelines regarding the retention of medical records. As a result, it's important for business owners and managers to understand the requirements of the business they are in.

Document-Retention Guidelines

Despite the variations in document-retention requirements among industries, many guidelines cut across industry lines. For example, anything having to do with taxes should be kept at least seven years. Auditor's reports, annual financial statements and general ledger information should be kept on a permanent basis. Any records related to a pending or reasonably anticipated legal action or tax audit should not be destroyed, and any record related to a company contract should be kept for at least the length of that contract.

If there is in place a company document-retention policy that conflicts with federal, state or local requirements, the regulatory requirements should take precedence over company policies.

Designing a Policy

Many companies develop their own document-retention guidelines based on standard industry practices and their own business needs. Others turn to experienced legal counsel to draft the requirements that are critical to the business. Many larger companies also employ a records-retention officer whose job is to ensure compliance with company document-retention policies.

The website of the American Records Management Association ( contains a wealth of information about paper and electronic records management. Another good resource for document-retention information is the website of Iron Mountain (, a company that provides services for record and information management. Iron Mountain's website includes a wealth of informative articles and white papers covering compliance, legislation and the how-tos on record-retention management.

Legal and Liability Protection

Developing document-retention guidelines provides a level of protection against legal and tax liabilities that may arise down the road. Even when important records have been destroyed, investigators tend to be more understanding in the presence of written and implemented document-retention guidelines.

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About the Author

Cari Haus has authored or co-authored a score of books on topics ranging from business and health to parenting, faith, and life. After earning a B.B.A. from Andrews University in 1982, Haus became a C.P.A. in 1985. Lately she has been writing business articles for the newsletter Real Estate Advisor.