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Your business has to keep federal tax returns and supporting documents for up to seven years. OSHA accident forms must be kept for five years. Many legal documents need to be retained indefinitely. This confusing tangle of storage requirements emphasizes why every business needs a policy for data retention. What is a retention policy, and how do you create one?
A data retention policy outlines how, where, and for how long your organization stores data. A good retention policy also includes guidelines and responsibilities for data storage, such as information security practices to follow.
Retention policies cover a wide range of data types and documents:
Companies usually have different retention procedures for each type of data. For example, businesses generally store confidential financial documents differently than email communications.
A retention policy is a document with two main audiences: company personnel, who need clear guidelines for managing and storing data, and everyday consumers, who need to understand how their data is handled and protected. This policy has several different purposes.
Many types of business records are critical for the smooth operation of your business. Manufacturers depend on production records to monitor process efficiency and improve product quality. B2B companies need client records, contracts, purchase orders, and invoices to deliver the right items at the correct prices. Reviewing employee data can show businesses ways to improve productivity and efficiency.
Depending on your industry, there are strict requirements regarding data collection, storage, protection, and deletion:
In many cases, creating and implementing a comprehensive data retention policy is a cornerstone of compliance. Violating the rules can carry sizable penalties.
Secure data storage is an important part of cybersecurity best practices. This includes regular data backups and cloud storage. Data loss prevention practices can help your company bounce back in the event of a ransomware attack or natural disaster. Your data retention policy should include procedures to safeguard information against unauthorized access, such as encryption, multi-factor authentication, employee restrictions, firewalls, and other robust network defenses.
Many regulatory frameworks require your business to explain to users in detail what type of data you collect, how you use it, how long you store it, and who can see it. Creating a data retention policy helps you meet these requirements.
Displaying your retention policy on your website also helps you build customer trust. If you take a consumer-friendly posture toward data retention — such as encrypting client data or never selling information to third parties — highlight those details proudly. Write your policy in simple language that anyone can understand.
If you’re engaged in a lawsuit, you often legally need to retain certain documents for a long time. Additionally, you may have to create a centralized data storage location that is secure but not encrypted. Including these details ahead of time in your data retention policy can help you avoid discovery violations.
The design of retention policies depends on the size of your organization and the scope of your data processing. That said, every policy should cover the following elements:
A corporate data retention policy doesn’t have to name specific documents (e.g. balance sheets), but it should provide all of the details necessary for departments to store the required records securely and in harmony with regulatory requirements.
Use your data retention policy as a reference manual for guiding your organization’s data handling procedures. A comprehensive policy can strengthen your cybersecurity defenses and help you avoid costly mistakes.
If your organization must comply with GDPR, SOC 2, ISO 27001, or other frameworks, build your data retention policy around the necessary regulatory, privacy, and cybersecurity guidelines. For example, SOC 2 audits have extensive evidence-gathering requirements.
Customize your data retention policy by getting advice from business professionals in your organization. Speak with legal, financial, IT, and accounting teams about recommended data retention periods for related documents.
The risk of data breaches means your organization’s data retention posture should follow up-to-date cybersecurity practices:
Data backups are an essential part of any modern retention policy. Regularly create redundant backups at multiple storage locations, including an air-gapped security copy for ransomware protection.
The first step in creating a data retention policy is identifying your organization’s information assets. A common mistake is overlooking the importance of records such as company emails for business continuity after a cyberattack. Platforms like Compyl make it much easier to visualize, organize, and centralize your organization’s document flow and data storage. Define your retention policy efficiently and effectively with Compyl’s advanced features now.
