The Importance of Record Retention in Growing Businesses

 Email Article |  Twitter |  digg it |   LinkedIn 

Document retention is a topic is not always well understood and frequently makes its way to the back burner as growing firms channel their energies into more imminent demands. But keeping easily accessible records can save significant time and expense if and when their need arises.  As business communications continue to trend from paper to electronic documents, it has become both easier to preserve information as well as inadvertently destroy it.  It is therefore essential that small business owners have a good understanding of what information should be maintained and for how long.  Beyond conforming to laws and regulations, there is a sound business upside to retaining records; maintaining an accessible financial history of your company can provide the foundation necessary to make informed prospective decisions.

In the wake of the malicious accounting cases of the last decade, several well-known regulations have been enacted such as the Sarbanes-Oxley Act, which concerns large, publicly held firms.  Several other less-known state and federal rules apply to all companies, regardless of size and complexity.  In many cases a company is never too small to comply, and violations can be disastrous financially and otherwise.  Depending on the nature of your business, certain additional agency regulations may apply beyond those concerning taxes – those governing employment, medical and financial instruments, for example.  Once all applicable rules have been considered and a retention policy has been defined, it’s equally important that it be communicated to and understood by everyone in your firm.

A sound record retention policy also provides for the destruction of information that is no longer useful or required to be kept.  If there is legitimate purpose behind the removal of unnecessary records, it is important that guidelines for doing so be codified as well.

We have attached a Record Retention Guide recently released by the MSCPA and hope it will be of assistance in planning your company’s retention policy.  If ever you are unsure whether information must be retained or have a question about implementing best practices, please reach out to our team at Verge Advisors.