Storing business documents can not only be a hassle, but it can also turn into an expensive exercise. Confusion is rife amongst businesses as to what and how long for to keep their documents. And this is complicated further by the varying legislative periods for record retention and the confidentiality and privacy requirements to keep documents.
Many business owners believe that business records should be kept for 7 years before they can be deleted or destroyed. And this is true in many cases. There are, however, circumstances where retaining records for 7 years would be insufficient and may potentially expose the business to greater legal risks. Likewise, there are classes of documents that do not require document retention for such a long period, and in some instances, at all.
So why don’t businesses keep their records indefinitely? Firstly, there is the logistics and cost issue of storing the physical records. Even where you can convert or keep your records electronically, ensuring they are backed up off-site can result in a significant cost to your business both in facility expenses and management time. Secondly there are many security and safety issues. The more records you keep, the greater the chance of information being leaked or stolen. This will be an issue where an information breach involves personal or confidential records.
Working documents including drafts, reference & external materials
There are many types of documents in which there are no legal retention requirements. These include working papers such as notes, calculations and drafts used to create reports, plans or correspondence. However, where the working papers contain valuable information not included in the final document, these should be kept.
Other types of documents that have been retained include reference materials such as copies of procedures, guidelines, manuals and plans. As well as external materials such as marketing materials, newsletters, catalogues and price lists where multiple copies of these items exist.
Intellectual property (IP) includes patents, trademarks, and copyright materials. These items require a business to keep records for much longer periods of time than the typical seven years. A business’ IP commonly forms a significant part of its assets, and it is then important to take steps to keep the appropriate records.
The below table highlights the how long business’ must typically keep IP documentation:
|Copyright||Copyright Act 1968 (Cth)||70 years after the end of the creator’s death.|
|Trade marks||Trade Marks Act 1995 (Cth)||10 years from the filing data of registration.|
|Patents||Patents Act 1990 (Cth)||20 years|
If your business collects personal information, and no longer needs it for any purpose, or is no longer using it, the Privacy Act 1988 (Cth) requires all private organisations to take reasonable steps to destroy it or de-identity the personal information. You can find out more about this requirement and the National Privacy Principles here.
It is important that the business reviews the personal information it has on record and periodically reviews whether the business still requires this information. If it doesn’t, then it needs to be safely and effectively destroyed.
It is prudent for a business to retain documents relating to potential or commenced litigation indefinitely, and minimally, for the period of the litigation. Destruction of documents relevant to a current or potential litigation may not only affect your case but may also be an offence under s317 of the Crimes Act 1900 (NSW).
By understanding your business record retention requirements, you will not only help protect your business assets but you will also help reduce your record retention costs by ensuring that documents are retained for their legally required period only.
LegalVision has a team of great online business lawyers who can assist you. If you have any questions about your business’ document retention, please get in touch on 1300 544 755 and our Client Care team will happily provide you with an obligation-free consultation and a fixed-fee quote.