Many of these expectations are informed by legal requirements established under federal, state and local laws, contractual obligations, and sanctions. A DRP can help ensure a business does not violate such laws, breach such contractual obligations, or incur such sanctions.
A DRP often proves to be critical in the event of litigation. Obtaining a favorable outcome in a dispute could very well depend on the business’s ability to produce a record. On the flipside, if a business is unable to produce a record during litigation because it was destroyed, a clear and consistently-applied DRP can serve as evidence that the business’s destruction of the record was reasonable, reducing the likelihood of court-imposed civil discovery sanctions.
A DRP improves businesses efficiencies. By distinguishing between “business records” (that must be retained) and “disposable business information,” a DRP discourages the unnecessary preservation of records that have no valid business purpose and are not subject to any legal or regulatory requirement requiring such records be kept, saving the business on expensive electronic and physical storage costs. A DRP often reduces the time employees spend locating and identifying business records, allowing them to expend their time and efforts toward other important tasks of the business.
While listing a record retention schedule for all business records is outside the scope of this article, below are some general retention period guidelines for certain business records:
|I-9 Forms||The later of 3 years after hiring or 1 year after separation|
|W-2 and W-4 Forms||As long as the document is in effect plus 4 years|
|Articles of Incorporation, Bylaws, Corporate Minutes||Permanent|
|Tax Returns||At least for 6 years until the extended statute of limitations for assessment expires if a tax return was filed|
|Audit Reports from CPAs||Permanent|
Every business can benefit from working with its advisors to develop and implement an effective DRP, including promoting compliance with law, limiting liability risk in litigation, and increasing efficiencies.