Guidelines for Choosing Your Organization's Record Retention Method

Keeping detailed records has never been easier than in the digital age. This should come as joyful news to any business. 

Record retention refers to the way a business stores 和 uses data for a set period of time. Although many in the workforce prefer physical paper, electronic storage is a safer 和 more reliable option. Failure to comply with retention requirements could result in major 税 和 legal issues, 和, unfortunately, Uncle Sam is not very forgiving when one loses a document. 

It is crucial for a business to decide what works best for them when navigating record retention guidelines. Some companies might stick to paper, others electronic, 和 some will go with a hybrid. Each method has pros 和 cons, 和 it is important for a business to carefully consider the most efficient 和 accurate record retention system. There are many factors to consider when deciding on a record retention strategy:

1. Convenience 和 Flexibility - A system that provides an easy way to share documents is best. Electronic storage systems provide for easy transportation of what could be multiple physical boxes of information, in a single mouse click. 然而, there are risks of malicious third parties who try to hack into a system 和 steal data if it’s not properly secured. 
2. Reliability - Paper documentation is extremely dependable 和 is not susceptible to power outages 和 server failures. 然而, it is susceptible to floods, fires 和 other natural disasters. It is true that electronic records can also be damaged or destroyed, but it is much easier to create backups 和 recover lost work. 
3. Security 和 Privacy - Cybercrimes are on the rise with an average of 2,244 cybercrime attempts per day in the U.S. 独自一人. If a company wants to use electronic recordkeeping, it is important to develop internal controls to ensure the security of customer data. A business should never rely solely on a software vendor to provide security. 
4. 存储 - While paper records are tangible 和 can run out of space, electronic storage is nearly infinite. If a company outgrows its own servers, it is easy to find off-site storage facilities that will safely harbor records. 
5. 成本 - Although this factor might have been different 10 years ago, electronic record retention is the cheapest option for almost every business. Year after year, the cost of storage goes down, making electronic storage a cheap option for businesses of all sizes. 

Once a method is chosen, the organization should develop a document retention policy. A document retention policy spells out how long a business keeps different types of data, how it formats data, where the data is stored, how long the data is stored, 和 the disposal process for the data. A fully developed document retention policy makes data more accessible, reduces storage costs, helps consolidate document storage, 和 can provide an improved process for disaster recovery. 

Deciding how long a business should retain documents can pose a challenge; a helpful tip is to look at the statute of limitations for various operating procedures, 和 then add a year. For example, most 税 returns have a statute of limitations of three years for most items 和 a statute of limitations of six years for significant understatements. It would be recommended that businesses retain 税 return data for a minimum of four years, or seven years if they want to be cautious.

Record retention procedures are not a one-size-fits-all approach. It is important for any business to do due diligence before deciding on a document retention policy. If you have any questions on how document retention implementation strategies can benefit your organization, please contact our team at [email protected].

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