Seven Year Rule: Not True for all Documents

By Gail Bisbee, President/CEO, Confidential Records Management, Inc.

For Immediate Release   -   October 16, 2009

Ask any given business owner how long they keep their records and some will reply, “oh, about seven years,” since that number sticks in their head from previous discussions with accountants or lawyers.  Others will tell you “we never throw anything out – just in case.”   So what’s the correct answer?  It depends.  Different document types can fall under very different rules and laws as to when they can be shredded or discarded.   So, if you fall into the “we never throw anything out” category, then you know how quickly the papers and records you’re keeping pile up.   In fact, active files typically grow at a rate of about 25 percent annually.   That’s a lot of paper!

The first thing you need to do before tossing old files, is to consult with both your legal and accounting staff to determine the length of time for specific records on hand. 

Then, based on your findings, a records retention and destruction plan should be created.  A records retention and destruction plan will not only help you stay organized, it will also help to protect you from certain laws and help prepare you in case of an audit.

What does a records retention and destruction plan include? Here are a few guidelines:

• Determining document types on hand and which laws apply to the documents – Patent work, trademarks, building plans, etc… all have different storage lengths based on local or Federal regulations.  In fact, there are even many federal laws now based upon the information with PCI compliance, FACTA, HIPAA and Sarbanes-Oxley which need to be taken into account when deciding how long to hold onto that particular document.


• A retention schedule – Many have a misconception that it’s better to be safe than sorry when it comes to holding onto documents; however, if documents aren’t discarded precisely when it’s time, federal law says that during an audit, they can go through all of your records on hand, regardless the age.


• Destruction plan of action – When the decision is made that certain documents can be discarded, it’s critical to discuss the safest and most secure way to properly destroy the records so they don’t end up in the wrong hands.  If you’re considering using a professional service, make sure you’re using a vendor that can provide on-site shredding services and will also provide you with a destruction certificate so you’re assured the record was disposed of securely.

After a records retention and destruction plan is established for your business, make sure it is clearly communicated with staff.  Roles should be clearly defined as to who has permission to handle the destruction of the records.  While going through stacks of records that may have not have been looked at for years may initially take some time, once you’re over that initial hurdle, you will find records management to be just another everyday facet of your business.   And, if you should ever be audited or have a legal issue arise, you will be glad you took the time to put a plan in place.