As a Canadian business owner, keeping proper records is an essential part of running your business. Not only is it a legal requirement, but it also helps you make informed decisions about your company. However, the question of how long you should keep these records can be confusing. This is where records retention comes in. In this blog post, we’ll cover everything you need to know about records retention, including the best practices and legal requirements for your business.

What is Records Retention?

Records retention refers to the process of keeping records for a specific period of time. This includes financial records, such as tax returns and invoices, as well as employment records, such as employee contracts and performance evaluations. Records retention policies can vary based on the type of record, the industry, and legal requirements.

Why is Records Retention Important?

Keeping records for an appropriate length of time ensures that you have access to important information when you need it. For example, if you need to access financial records to apply for a loan or respond to an audit, having those records on hand can save you time and money. Additionally, records retention helps protect you in the event of a lawsuit or legal dispute. Having records that support your position can be crucial in court.

How Long Should You Keep Records?

The length of time you should keep records depends on the type of record and the legal requirements in your province. As a general rule, financial records should be kept for six years, while employment records should be kept for seven years. However, there are exceptions to these guidelines, so it’s important to check with a professional to ensure you are in compliance with the law.

Best Practices for Records Retention

In addition to legal requirements, there are some best practices you can follow to ensure your records are properly maintained. First, store your records in a secure location, such as a locked cabinet or password-protected digital file. This helps prevent unauthorized access to your sensitive information. Additionally, organize your records in a logical and consistent manner to make it easy to find what you need when you need it. Finally, consider using a document management system to streamline the process of record keeping and ensure that your records are backed up and secure.

Conclusion

Records retention is an important aspect of running a business in Canada. Properly maintaining your records can save you time and money, as well as protect you in the event of a legal dispute. By following the legal requirements and best practices outlined in this post, you can ensure that your records are properly maintained and accessible when you need them.