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Document Retention 101: Keep This, Toss That

Document Retention 101: Keep This, Toss That

The length of time you should keep a document depends on various factors. Do you know what to keep and what to toss?  As business owners and consumers, we’ve amassed plenty of paperwork that can be complicated to track and file. The digital age has certainly made it easier for us to retain records and as much as we’d like to toss it all in the trash, there are documents that have yet to outlive their retention periods. What should you keep and what should you toss? Here’s a quick guide to document retention to keep handy as you get organized –

Keep Indefinitely

Documents like birth and marriage certificates, social security cards, wills, and records of paid mortgages will never expire, and thus need to be retained forever. While copies can be obtained for a fee, your best bet is to invest in a safe, locked file box, one that is water and fireproof so that your documents are protected from damage. Keep these documents in a space that is easy to get to and easily remembered. For business owners, the same goes for articles of incorporation and other supporting documents, like EIN numbers.

Keep for 3 Years

Bank Statements – You should hang onto bank statements for a period of 3 years if you’ve been audited by the IRS. Most banks provide online statements that you can download and save to your computer if you prefer to save some space in your home or office.

Tax Returns – This one is actually a little trickier and comes with a caveat: The IRS suggests that you “keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later.”

Real Estate Records/Investments – Real estate and other investment records should be retained for 3 years for capital gains tax purposes.

Keep for 1 Year

Medical bills, paycheck stubs, utility bills, and credit card statements should be kept for 1 year. One exception to this rule is your utility bill; if you write-off your utilities as part of a home office expense, then keep with your tax filings for 3 years.

Some paperwork doesn’t come with a hard and fast timeline when it comes to document retention. Documents such as records of loans that are current should be kept until the loan is paid off. Once you’ve received documentation that supports a fulfilled loan, file these indefinitely along with your other “to keep” documents in a safe place.

Other documents like credit card bills can be tossed once you’ve verified the purchases. Consider holding onto these for big-ticket items, or if you’ve purchased an item that is a business tax write off, per the IRS.

But what about going paperless?

On one hand, going paperless has its advantages. It’s a great way to remove physical clutter, but more than that, once your paper documents have been scanned to your computer, you’ll be able to access them easily, turning your paper documents into digital files that are easy to locate.

“Our business has been migrating into a paperless office environment since the IRS has been accepting paperless versions of certain documents.  We have changed our procedures to scan every document that comes through our office and destroy the paper versions once it has been verified that an actual hard copy is not required for our files,” according to Jonathan Schneider of Schneider Financial Group, LTD.

“The two main components for getting an office to a paperless state are getting a software program that stores the files in an easy to use interface and also encrypts the information simultaneously.  The second aspect and just as important is contracting with a reliable mobile shredding company to work with our firm in the destruction of paperwork with sensitive information. With these two items in place, the transition from an overloaded hard copy paper environment to a streamlined paperless environment becomes achievable throughout almost all industries.”

Despite being in the digital age, we still rely heavily on paper. If you have documents that need to be tossed, do NOT throw them in the regular trash. Remember, once trash or recycling is placed out on the curb or a designated location for pick up by trash collectors, it is considered discarded by the property owner and becomes public domain.  Call a certified paper shredding specialist to help you safely and securely destroy and recycle all of your old paperwork.

Legal Shred works with businesses and consumers to keep their offices and homes free of paper clutter, in addition to keeping identities safe and secure.

With Legal Shred, you get:

  • Complete protection of information
  • Compliance with government regulations and document destruction laws
  • Prevention of information and identity theft
  • Saved space, time, and money.

When it doubt, always check with your local government agencies for document retention periods. When you’re ready to clean up, call Legal Shred!

 

Document Retention

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