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Owning a business requires a vast amount of documents and paperwork. This may include paper documents and electronic data, and range from financial statements to personal information. Organising all your business’ data may seem like a daunting task. A document retention policy provides your business with a plan for how it should organise, store and discard paper and digital records and information. This article will outline:

  • the importance of such a policy;
  • what documents to include in a document retention policy; and
  • how you can go about creating such a policy for your New Zealand business.

Why Does My Business Need a Document Retention Policy?

Three key benefits accompany having a well-drafted document retention policy from the beginning of your business.

Compliance

In New Zealand, there are an array of documents that businesses and companies legally have to keep for fixed periods. The retention period of certain documents or certain records will depend on the document type. 

For example, if your business has employees, you must keep: 

  • certain personnel information for at least six years; and 
  • pay records for at least seven years. 

Doing so ensures that your business can produce these records, should an employee or their representative from a union request to see it. Documents also have to be retained in case a government agency, such as the Ministry of Business, Innovation and Employment, wishes to examine them. 

A document retention schedule ensures that your business complies with these retention requirements. 

Improve Efficiency

A disorganised filing system can make it incredibly time-consuming and challenging to find a document or file. This disorganisation can be particularly frustrating if you need to give a particular document to a client or agency.

A document retention policy ensures that you know where each type of document is when you need to produce it.

Minimise Storage Issues 

Failing to discard documents can, over time, be incredibly costly for your business. As more documentation comes into your business, you will have to purchase more in-person or digital storage systems to accommodate it.

A document retention schedule provides your business with the tools to get rid of unnecessary documents, thus creating space in your current systems for incoming documents. 

What Documents Should Be Included in a Document Retention Policy?

A document retention and disposal policy should deal with all classes of records that your business deals with. These documents may include:

  • personal records of your employees, such as past employment agreements or tax code declarations;
  • electronic documents; such as your company’s records or financial documents;
  • electronic records in databases; or
  • larger resources, such as files or books.

How Does My Business Create a Document Retention Policy?

Consider What Documents You Work With 

The first step to developing a document retention policy is to evaluate the types of documents that your business works with. This evaluation should include the:

  • form of the documents, such as whether your business deals mostly with hard copies or digital documents; and
  • type of documents, as this will affect how long you have to keep them for. 

Consider What Space You Have to Work With

You should also evaluate the type of space you currently have to store these documents. This evaluation should also include the amount of digital storage space your business has. 

You may not have adequate space or facilities to store the type or amount of documents you must retain. Doing this evaluation before you start implementing your document retention schedule will guarantee that every document has a clear space and ensures that the implementation process is as efficient as possible.

Plan for Storage

Once you have evaluated the array of documents and the space you can store these files in, you will now have to determine how you are going to store these resources. It is crucial that you store your documents by type. 

For example, employee personnel information should be grouped in one section, and financial records in another. 

This separation: 

  • makes it easier to find the type of document you are looking for; and 
  • aids in compliance with document retention requirements. 

Documents that you must keep for seven years, for example, will be kept in the same physical or digital space. 

Plan for Disposal

You should also determine the disposal process for documents that are no longer relevant or necessary. By separating your documents by type, your business can efficiently clear out non-current documentation, without the concern of potentially disposing of current or required documents. 

Compile Into a Document Retention Policy

Once your business has determined these storage and disposal processes, you should compile this into a document retention policy. 

This policy should be a single document that is available to all staff members to ensure complete compliance. Draft the policy with the end-user in mind. Those responsible for storing and sorting your business’ documents will not have the time to read through technical and poorly-worded guidelines. Therefore, your policy should be in clear and straightforward language to ensure it is easy to understand and implement. 

Key Takeaways

A document retention policy is a key tool in ensuring that your New Zealand business works efficiently and complies with its legal obligations. The policy should be well thought out and developed early in your business timeline to ensure it can be effectively implemented and adhered to. A good document retention policy is one that is well-drafted and specific to the needs of your business. If you need help assistance with preparing a document retention policy for your business, contact LegalVision’s business lawyers on 0800 005 570 or fill out the form on this page.

FAQs

What is a document retention policy?

A document retention policy provides your business with a plan for how it should organise, store and discard paper and digital records.

Why is a document retention policy important?

A document retention policy is crucial to your business as it:
ensures compliance with document retention guidelines;
improves the efficiency of finding information; and
minimises storage issues.

What is the retention period for documents?

The retention period is the amount of time that your business should keep a document for. This period will vary depending on the type of document.

What should a retention policy contain?

A retention policy should contain a plan for the retention, storage and disposal of documents.

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