As we start bringing 2018 to a close, now is the perfect time to sort through all those documents that you still have lying around organise them by what can be thrown away and what you need to keep.
Did you know that different types of documents have different lengths of time that businesses need to retain them? The most common length of time to hold onto important documentation is seven years and this is a great point for most businesses to start at.
There will be some instances where it states that the documentation must be retained for a minimum of five years, as seen in some examples below, however the underlying message is the same.
The essential rules are as follows:
- Financial records must be kept for a minimum seven years after the transactions have been completed
- Employment records must be kept for seven years after termination
- Tax records must be kept for a minimum of five years
- Documentation of assets must be kept for five years after they are sold.
There are some instances where you need to retain your documents for more than seven years, or even indefinitely. An example of documents that must be retained indefinitely are trust deeds. Documents relating to matters of trademark and copyright must be kept for as long as rights to the intellectual property exist. Any documents relating to matters of legal action must be retained for the period of litigation or permanently.
When you finally find the time to start re-organising that drawer you keep everything in, here are a few things to consider:
- Any essential documents should be kept in a safe and secure location so as to avoid any risk of theft, being misplaced or damage due to fire.
- Be aware that confidentiality and privacy obligations may exist. In this instance, it is helpful to take into consideration the location you are storing these documents, who may be able to access them and any agreements made with a third party storage provider.