The volume of outdated documents and papers that are lying around the average office can be extremely overwhelming. It can be very tempting to keep hold of these documents out of fear of destroying documents that include relevant and important information.
Shredding old and outdated documents is not just a way of making space in an office, it is also a way of adhering to strict data protection laws set out by both federal and state laws. Holding on to important documents for longer than necessary can make you susceptible to breaching these laws.
In this article, we will detail why exactly businesses need to shred confidential documents. We will also detail the business documents that you can shred, and the documents that you should never shred.
Why Do Confidential Business Documents Need to be Shredded?
The main reason behind shredding confidential documents is to adhere to strict data privacy laws. 94% of companies that must comply with GDPR are either partially or fully non-compliant with the requirements. Data privacy breaches can cost organizations up to $7,500 per violation.
The main reasons behind businesses needing to shred and destroy documents are:
Protect Sensitive Data
A majority of the documents that businesses store include a large amount of sensitive and confidential data. Therefore, shredding and destroying this data helps to protect the data from getting into the wrong hands through potential data leaks. If the data ends up in the wrong hands, then it can leave the organization exposed to leaking confidential customer and employee data.
Data Regulation Compliance
In the United States, there are numerous data regulation laws that organizations must adhere to. The act of shredding sensitive documents and hard drives to destroy data helps organizations comply with the data privacy and data destruction laws that exist in the United States. If organizations do not follow these data compliance regulations, then they can leave themselves vulnerable to violations and costly fines.
Internal Organization
Documents and files can take up a large amount of space within an organization or office. Therefore, organizing these documents through shredding helps a business to get on top of its internal organization, and work towards a paperless office. This can have a positive impact on the overall processes within a business. It also allows for more room that can be utilized for other areas of the company.
Business Documents That Should Be Shredded
Many different documents should always be shredded to protect the privacy of your business, employees, and customers. These documents are:
Tax Records
Eventually, tax records should always be shredded. However, it is necessary to hold onto these kinds of documents for up to seven years. This is because the Internal Revenue Service (IRS) may need these receipts and documents to back up your numbers. The seven-year period will ensure that you are safe. After seven years have passed, these documents should be shredded and discarded.
Employment Tax Records & Employment Documents
The IRS recommends that all businesses keep hold of their employee tax records for at least 4 years. This is to cover themselves in case an employee questions them at all. After these 4 years, you should shred these sensitive documents, as they feature very confidential information about your employees such as social security numbers, identification numbers, personal info, and salary information.
Bank Statements
Bank statements, credit card statements, and other financial statements can feature very sensitive data on a business's accounts. Therefore, they should not be held on for longer than necessary.
You can typically shred your paper bank statements and documents after around a year of use. This is because you can now access all your bank statements online. However, if you need bank statements to support and prove your tax returns, then you should keep a copy of the physical document at hand.
HR Records
The U.S. Equal Employment Opportunity Commission (EEOC) states that if your business employs more than 15 people, then you must legally keep employee records for at least a year.
These records include job applications, promotions, employee tests, layoffs, and even documentation for applicants you don’t hire. However, accountants and lawyers will recommend that you keep these documents for longer than a year in case an employee ever tries to make a claim against your organization.
What Documents Should Not Be Shredded By Businesses
While many document types can be shredded and destroyed, many types of business documents should always be kept ahold of. These documents are:
LLC Records
It is extremely important that you keep all documents and business records related to your LLC. This includes all your business formation documents; bylaws; articles of organization; lists of shareholders, members, and directors; annual reports; meeting minutes; and trademark, copyright, and patent registrations. These documents are important for your business, so making sure that they are very secure is integral.
Legal Contracts & Legal Documents
It is suggested that businesses hold onto all legally binding contracts long-term. This includes any lawsuits that were made, claims made, as well as long-term contracts with vendors and businesses. In addition to this, it is also important to keep hold of any contracts that you have related to your lawyer, as they can come in handy further down the road.
Internal Financial Records
Keeping a copy of documents such as income statements, cash flow statements, and balance sheets is also very important. This is because these documents will help you monitor and determine the success of your business. You will be able to see how your business has either progressed or regressed from year to year. A business cannot succeed without understanding how it is currently performing in comparison to its previous performance.
High-Quality Commercial & Industrial Document Destruction Paper Shredders from Whitaker Brothers
Here at Whitaker Brothers, we carry the highest-quality commercial-grade shredders on the market. We have a huge collection of shredders that are available in various degrees of security, ranging from Level 1/P-1 to Level 6/P-7 High Security. Whether your business is looking for a robust device designed for high volumes and demanding environments, or a more lightweight and practical machine for small offices, our impressive collection has everything for you.
