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Document Management – How Long Do I Have To Keep My Paper Files?

Document Management – How Long Do I Have To Keep My Paper Files?
by Ramona Creel

At work, at home, no matter who you are or what you do — we are all bombarded with paper. Some days, as I help clients sort through their mail, I’m amazed that we have any trees left on this planet at all! Junk mail, bills, magazines, newspapers, memos, reports — it’s an endless source of stress. Things have gotten so bad that we’re developing a new fear in our society — “paperphobia,” the fear of having to deal with that stack that’s been sitting there for a week. But a good document management system is the key to overcoming your paper-induced worries!

Thinning The Herd

Remember the first rule of clutter — “the less you have, the easier it is to organize.” The paperless office is still a long way off — I can’t guarantee that you will ever be able to eliminate paper from your life completely, but you can certainly reduce the size of the piles. Let’s start by going through your old files and doing some cleaning out. I believe strongly that if you don’t have a good reason for keeping it, get rid of it — but a lot of folks are afraid to ever throw a document away because they might need it again “someday.” How do you define “someday?” I suggest that my clients ask themselves some basic questions about why they are keeping their paper:

  • Is the information relevant to my life, personal interests, or job?
  • Has this information become outdated? Can I find a more current document?
  • How easy would it be to replace this if I needed the information later?
  • What is the worst thing that could happen if I got rid of it?

That last question leads us to the subject of purging financial and legal records. This is a sensitive (and somewhat scary) issue, because there could be some harsh consequences if you throw something out too soon. I agree that it’s better to be safe than sorry, but fear is a poor organizing guide. If you simply take the time to educate yourself about how long you are legally required to retain each document, you’ll never go wrong. Effective document management is all about having the right information and acting on that knowledge.

Records Retention Guidelines

In recent years, an entirely new field of study called “records management” has arisen — dedicated to helping people understand how long they must keep certain documents. Based on the information gathered by this industry, I have compiled standard schedule for purging your files. But please understand that this is a complicated issue (especially in today’s litigious society), and each situation is unique. Many professions set their own legal guidelines for records retention, and you may have some unusual or extenuating circumstance in your life — so check with your accountant or attorney before pitching out any important legal, business, or financial paperwork.

You must keep the following documents forever (yes, forever!):

  • income tax returns
  • income tax payment checks
  • annual financial statements
  • books of account
  • corporate documents
  • stock records
  • retirement and pension records
  • licenses, patents, trademarks, and registration applications
  • investment trade confirmations and statements that indicate buying and selling
  • documents substantiating fixed asset additions
  • important correspondence
  • legal documents
  • trust documents
  • CPA audit reports

Businesses are held accountable to a much stricter set of rules than individuals. In addition, specific industries set their own legal standards, including but not limited to healthcare, insurance, law, etc. In addition to the items listed above, all companies should create permanent files for the following, but be sure to ask your professional association for any additional policies for record management and retention.

  • annual financial statements
  • stock records
  • purchase receipts
  • fixed asset documents
  • licenses, patents, trademarks, and registration applications
  • other corporate documents such as incorporation, charter, constitution, bylaws, minutes

Hold onto the following paperwork for six years. The IRS may go back 6 years to audit your tax returns for errors or incorrectly claimed deductions, so it’s important to keep all tax-related documents.

  • bank reconciliations and voided checks
  • canceled payroll and dividend checks
  • personnel and payroll records
  • purchase records
  • sales records
  • travel & entertainment records
  • supporting documents for tax returns
  • mortgages, deeds, leases on sold property (keep for 6 years beyond the life of agreement)
  • sales receipts (if tax-related)
  • utility records (if tax-related)
  • medical bills (if tax-related)
  • other bills (if tax-related)
  • vendor invoices
  • supporting documents for tax returns
  • accident reports and claims

Keep these records for three years:

  • monthly financial statements (for internal purposes)
  • credit card statements
  • utility records (for internal use)
  • employment applications
  • expired insurance policies
  • medical bills (in case of insurance disputes)

You should retain these records according to the following guidelines:

  • car records (keep until the car is sold)
  • credit card receipts (keep until they have been verified on your credit card statement)
  • ATM and deposit slips (keep until reconciled on your bank statement)
  • insurance policies (keep for the for life of policy)
  • pay stubs (keep until they have been reconciled with your w-2)
  • property records, builder contracts, and improvement receipts (keep until property sold)
  • sales receipts (keep for the life of warranty or the life of the item on large purchases)
  • stock and bond records (keep for 6 years beyond selling)
  • warranties and instructions (keep for the life of product)
  • other bills (until the payment is verified on the next bill)

Safely Disposing Of Paper

Just because you cleaned it out, does not mean that it goes in the trash! Did you realize that once you put something in a garbage can at the curb, it becomes public property? And reports of identity theft are increasing every day. When someone else gains access to your personal records (social security number, tax id, drivers license number, address, bank account information) and pretends to be you, the results can be disastrous. Using your identifying information, this person can take out loans, run up credit card bills, and run up a tremendous amount of debt — all in your name. And most times, you never know until you get the collection letter. It can take years to clear up the legal and financial problems this causes you, and it can temporarily ruin your credit. Proper document management is synonymous with safety.

So to protect yourself from this threat, be sure to dispose of your important records properly. Any piece of paper that contains account numbers, your social security number, or any other sensitive information should be shredded. If you only have a small amount of paper to destroy, consider visiting your local office supply store to pick up a personal shredder — they run as little at $20 or $30. If you generate a large quantity of “shredable” paper, or just don’t want to sit there feeding in one page at a time, think about using a mobile shredding service. These companies will come to your home or office and shred your documents on-site for a fee.  Just be sure that you choose a reputable company that provides you with a certificate or letter guaranteeing that your paper has been shredded unrecognizable.

Welcome To The Digital Age

In order for your filing system to be truly effective, it should really have two components — a paper side combined with electronic document management software. Software such as Paper Tiger Filing System Software for Document Management is designed to save you time and effort when you are ready to either file or retrieve your paper files. You simply indicate where that item is stored and assign it a series of relevant keywords. Then you never need worry about misplacing a file again. Simply search by the name of the document or one of the keywords and voila! If you’re filing the old-fashioned way without document management software, you’re working too hard!

About the Author

Ramona Creel is Professional Organizer, NAPO Golden Circle Member, and the original founder of OnlineOrganizing. A former Social Worker, she has always enjoyed helping people find the resources and solutions they need to improve their lives. Ramona now travels the country as a full-time RVer, sharing her story of simplicity with everyone she meets. She leads by example — having worked for more than 10 years as a Professional Organizer, and having radically downsized and simplified her own life as a full-time RVer. Ramona now considers herself a “Renaissance Woman” — bringing all of her passions together into one satisfying career. As a “Virtual Organizer”, she can create a customized organizing plan for your home or office. As a “Simplicity and Accountability Coach “, Ramona provides a proven program for making every area of your life a little bit easier — perfect for those who want to make the time and space to focus on their true priorities. As a Professional Photographer, Ramona captures powerful images of places and people as she travels. And as a freelance writer and blogger, she shares organizing techniques, travel tips, and social commentary with others. You can see all these sides of Ramona — read her articles, browse through her photographs, and even hire her to help get your life in order — at www.RamonaCreel.com. You can also follow her on Twitter, check out her Facebook profile, and subscribe to her blog feeds.


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