Call or text 800-929-1725 for an appointment. In this video, Attorney Ray Kerlick talks about why your business needs a document retention policy and some issues to consider in creating a policy.
Summary of Why Your Business Needs a Document Retention Policy
Hello, my name is Ray Kerlick. I’m a partner with the law firm of Wadler, Perches, Hundl and Kerlick in Wharton, Texas. Today I’d like to discuss something that we think is very important for small business owners and that’s a document retention policy.
What that means is every business should have a written specified policy for what they do with, not just documents, but other information and data that they gather over the course of the years. Now the most common place that I as an attorney see this is in the setting of lawsuits. So often times what we’ll find out is that we will have a small business owner that is either sued or potentially gets wrapped up in a lawsuit involving other companies or other people in which certain documents are requested.
What no one wants to do is look bad and make it look like that they have failed to maintain their records in a proper way or that they purposely destroyed some piece of evidence that someone might find valuable. Now 99% of the time what we have found is typically there is no such document and certainly if there is such a document it’s very unlikely to be the “smoking gun.”
But often times that’s what lawyers trade on, is the possibility that what we’ve done is destroyed a very valuable piece of information. The best way to avoid that issue is to simply specify in writing how long we’re going to keep things. So, not just emails, not just documents, not just faxes, but also things like invoices, billing information, confidential customer information about your customers.
You should come up with some categories and some ideas of how long you really need to keep these types of things. Typically, I know in our practice, often times the way we look at it, is once we’re paid and the job is finished, what’s the point of keeping that document anymore? Well the answer is often times it will become valuable for future reference.
So, come up some ideas of what a good time frame is. The IRS typically says you should hold on to things for six years. I think that for financial records is probably a pretty good idea. For other records related to jobs, invoices and things like that, typically I would go from four years after the date that you last did the work. That document should be kept or that information should be kept electronically for that period of time. I think that’s a pretty good rule of thumb for most electronic communications as well.
Once four years have passed since the date that you’ve sent something it’s very unlikely that legal action could be taken related to that. But if there’s a realistic, good reason to keep certain types of documents longer, perhaps you’ll reference them in the future for future jobs and things like that, it’s no problem, just make sure you think about that and put it in your document retention policy.
As a final word I would say do your best to keep insurance documents, including references to your past insurance policies, forever. There’s a good reason for this. Those insurance policies are potentially valid even 20 or 30 years in the future. Most people don’t know this but that’s true and so, therefore, anything that you could potentially still act upon should be kept so that that information is available to your successors or followers in the company in some way.
So, make an attempt to think about what type of documents do we need moving forward and come up with a written document retention policy that helps you specify this. If you need help in any regard, please feel free to call us to discuss it further. Otherwise, we thank you for your time.
Ensure Your Business Policies Meet Your Business Needs
Wadler, Perches, Hundl & Kerlick has long experience in helping business clients develop the management policies they need. If you’d like to talk about creating a document retention policy for your business, please call or text our office at 800-929-1725. We have five offices in three counties across Southeast Texas. Our offices are in Wharton and El Campo in Wharton County, Fulshear and Richmond in Fort Bend County, and Bay City in Matagorda County.