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How organized are your records?

Operating any business will generate documents. From purchase orders and invoices to planning documents and correspondence, your business will produce and accumulate a variety of documents, both on paper and electronically during the course of a year. The larger your business, the greater the number and scope of those records.

The question becomes how do you collect, track and store those records and do you know which ones you need to keep and for how long? Filing cabinets fill up and even hard drives can become choked by too many files. From the standpoint of efficiency, you want to be able to locate and use the documents you need, and discard old or unnecessary documents and files when they are no longer of any use.

But maintaining a well-organized document retention policy does more than promote an efficient operation of your business. It can help prevent business litigation, in the sense that you will be less likely to make mistakes that could trigger litigation by causing a breach of contract or misrepresentations on regulatory filings.

If business litigation becomes inevitable, it can also foster an efficient response because you know exactly where the relevant documents are that support your case. By having detailed and accurate control of your documents, you also can avoid the unpleasant experience of being unable to produce relevant documents during discovery and being sanctioned by the court for spoliation of documents necessary for litigation.

Long before there is any prospect of such litigation, you should discuss with an attorney your records system and produce a document retention policy that is easy to use and efficient, as that will ensure that there is a place for everything and everything is in its place.

Source: nfib.com, "Creating Your Document Retention Policy (DRP)" NFIB, Accessed April 2016

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