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Even if you’re well-organized, documents have a way of
multiplying and, in our litigious society, many people are afraid
to discard anything.
So, what can you toss and when can you toss it?
Large travel companies spend lots of money developing document
retention programs to protect them in litigation, tax audits,
financial reviews and other such inquiries. Smaller agencies and
home-based agents can get protection, too, but without paying a lot
A knowledgeable attorney can prepare a complete plan or you can
try one of the templates available for a small fee on the Internet,
like those at ebizskeletons.com.
Categorizing your documents is the first step in creating any
retention plan. The standard categories are:
" Background Information
" Project Plans/Deliverables
" Sales Documentation
Once categories are established, it’s time to evaluate the
documents. Dan Greenwood, an attorney and e-business consultant
with civics.com, offers these tips:
Evaluate the legal or accounting reasons for keeping the
document. And if there’s a doubt in your mind, check with your
attorney or accountant.
Does the document apply to your taxes? Could it be used in a
legal proceeding or an investigation? Could it be a factor in
making a business decision? If the answer to any of these questions
is yes, keep the document.
Could you easily and reliably recreate the document if it’s lost
or destroyed?Could you get it from the Internet, a coworker, the
library? It’s pretty easy to keep track of paper documents in safe
deposit boxes and filing cabinets, but what about all the documents
and e-mails that reside in the virtual world?
“To the extent it is electronic, keep a backup,” Greenwood said.
“If possible, keep it somewhere else. But be careful to store the
document in a format that can be accessed later. If you use a
special software package, try just cutting and pasting the
important info into a text or work document to save it.”
“Redundancy is a key component of effective storage systems,”
said Michael Millar, president of Millar Technology Partners. “Not
only must data be backed up, but the backups should have redundancy
Keeping multiple backup sets spanning weeks or months is a smart
strategy as it allows a company to retrieve previous versions of
files which may have been since altered or corrupted.”
Companies commonly make the mistake of keeping only one backup
set of computer data.
“This is a surefire recipe for disaster as many data corruption
problems are not immediately detectable,” Millar said.
“It is easy to accidentally overwrite good data with corrupted
data. The best strategy is to keep multiple backups on site and at
least one full backup off site for use in the event of a
catastrophe like a fire or flood.”
The next big question is: How long should records be kept?
There are state and federal regulations regarding certain papers
that your attorney or accountant can explain. However, document
retention experts note that there are some general guidelines.
For example, most sales records, including internal
correspondence about the sale, should be kept during the
transaction and for any limitation periods. Tax and financial
records and all related documents generally should be retained for
In a litigious society, it can be tempting to go overboard in
the name of self-protection. But Greenwood and Millar are far from
suggesting that every scrap of paper or electronic document be
“The key is to hold onto records and documents that will be
useful in the event of an inquiry or establish the legendary ‘paper
trail,’ ” Millar said.
In fact, Greenwood noted, it often is a good idea to destroy
some types of business records on a general schedule.
“There are some types of correspondence or other extraneous
records that can end up being made into a mountain by opposing
counsel,” he explained.
If records are discarded on a regular schedule, he said, “Then,
there is never any implication that the records might have been
destroyed to avoid disclosure at a particular trial or other
However, he added, it’s always wise to check with counsel before
instituting a systematic purging of documents.