I Run a Business. What Documents Should My Company Retain?
Businesses accumulate lots of documents over their lifetime. As a business owner, you will need to make decisions about what documents to keep and which ones to throw away. You will need to preserve important documents to make them accessible over time for your business’ needs and to meet community expectations. At the same time, document retention can be expensive and take up a large amount of space. Before throwing any documents away, it is a good idea to be aware of any legal obligations that you may have with regards to retaining documents. This article unpacks some key considerations when determining what documents to retain when in New South Wales (NSW).
Key Considerations When Deciding Whether to Retain a Document
Some of your documents will have mandatory minimum retention requirements. However, whenever you make decisions about whether to retain documents, you should consider:
- whether the document holds any significance to your business that will require you to refer back to it;
- where the information in the document came from, the purpose you collected it and whether the purpose is still relevant, with reference to any applicable privacy laws;
- whether the document may be relevant to any current or future court proceedings; and
- whether the destruction of a particular document could appear to be wrongful or in bad faith, such as to cover up evidence.
It is vital that any document that could be connected with a dispute or legal proceeding, whether current, past or future, is retained by your business.
You should focus on the retention, rather than destruction of documents. Many businesses put together a document retention policy. This establishes processes to guide your employees on your business’ obligations and internal policies with regards to document retention.
Mandatory Minimum Retention Requirements
The table below set out some of the common types of documents held by businesses in NSW. Each document has a minimum retention period for which you are required to maintain the record. Of course, you may need to keep these documents for longer in some circumstances.
For example, you will need to preserve any document that is related to a current or anticipated legal proceeding.
| Type of Document | Retention Period |
| Financial records. This includes any document that records and explains your financial position and performance. These are important to retain because they will enable accurate financial statements to be prepared and audited. For example, you should keep all invoices, receipts and bank statements. | Seven years from the date the transaction covered by the record is complete. |
| Australian Tax Office (ATO) records. This refers to any document that records and explains any income tax or ATO related transactions. It also includes any document that demonstrates how you arrived at figures used in any ATO related dealings, including corporate tax records, year-end records and GST records. | Five years from the last relevant transaction. |
| Company documents. You need to keep all materials relating to the creation and ongoing governance of your company. This includes your company constitution, shareholders agreement and company resolutions. | Permanently. |
| Employee records. This encompasses any document that relates to any employment relations between your business and an employee. For instance, your employees’ personal details, type of employment and commencement date. You should also keep records relating to your employees’ pay, leave, superannuation and expenses. | Seven years from the end of the financial year in which you created the document. |
| Contracts. This includes any leases, supply contracts and purchase orders. | Permanently while the contract applies. After terminating the contract, you should keep it for six years from the date that you completed the transaction. Further, you should retain deeds for 12 years from the date you completed the transaction. |
Key Takeaways
Documents and records are critical to the ongoing management and performance of a business. However, they can be costly to retain indefinitely. For this reason, your business should understand its legal obligations to retain documents. Before you dispose of a document, you should consider:
- any mandatory minimum retention period;
- whether you will need the document again;
- whether it relates to any past, current or potential future litigation proceedings; and
- whether the destruction of a document could lead a court to make an adverse inference against your business.
If you need help determining whether you can dispose of a document, contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.
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