Document Storage and Retention Regulations

Any corporation, large or small, is required to know the laws regarding document storage and retention. Whether you are the owner, the manager of a small business or the CEO of a large corporation, you are responsible following the laws that are in place or face serious ramifications.

Knowing the laws regarding document storage and retention regulations is an essential part of the day-to-day operations of any business. There is a set of laws in place from the Federal United States government as well as the IRS regarding document storage and retention. The laws, referred to as the Sarbanes-Oxley Act or SOX are mandatory for all businesses.

Sarbanes-Oxley was enacted in 2002. It is named after its co-sponsors, Senator Paul Sarbanes and Representative Michael Oxley. SOX does give specific time frames for which documents are to be stored. It also states what documents are to remain stored and how the companies should store them.

Documents companies must store include anything related to the policy and performance of the company, audits, customer vendor invoices, purchase orders, employee applications, bank statements, contracts, legal correspondence and payroll. Any documents related to an audit or the conclusions of an audit, the companies have to store for seven years. Companies have to store customer and vendor invoices along with purchase orders for five years and employee applications for three years. Companies must retain any financial records, union contracts, training manuals, business contracts, legal correspondence and payroll permanently. Document types companies have to store include: hard copies, e-mails, instant messages and internal memos. For digitally stored documents, companies must keep them read-only, password protected, tamper proof, encrypted and digitally signed and a third party auditor of the company can search and read them.

The IRS also has its own rules for document storage related to tax forms. Once a business files their taxes and it is determined the business owes additional taxes, the forms are kept by the business for three years. All employment tax records are kept by the company for four years from the date taxes were due or paid. If it is determined the company filed fraudulently or never filed for year, those records are kept permanently.

The burden of following these practices lies on the management of the company. Management and those who support management must follow the document storage and retention practices set forth by both Sarbanes-Oxley and the IRS. Not following these procedures can cause more of a headache than any business wants to have.