When Benjamin Franklin cleverly stated that the only certainties in life are death and taxes, he did not foresee the amount of paperwork that future generations of printing presses would produce. With time, file cabinets fill with documents that you will rarely need, but know are important to keep. Thankfully, modern technology has made it possible to reduce clutter by saving documents in digital formats that ensure easy accessibility, storage and document recovery. Knowing when to keep original files and when to shred them will help reduce clutter and make your document management efforts simpler.

Document Retention Tips

When scanning documents, refer to your organization’s record management policies regarding the retention and destruction of files. Depending on your industry and the type of document, federal and state regulations may mandate that you retain original documents for a specific period.

Records to Keep Indefinitely

It is a good idea to retain legal documents and those that are difficult to replace, such as:

• Deeds
• Titles
• Audit reports
• Corporate documents
• Licenses
• Patents
• Trademarks
• Contracts
• Certificates for securities
• Government bonds
• Records related to depreciation, amortization or depletion deductions for assets you own

In addition to storing these documents in a safe place, scan them so you have a copies available should something happen to the originals to make document recovery simpler. 

Tax Records

The Internal Revenue Service recommends that you keep tax records and supporting documents (e.g., tax-related forms and receipts) for the following lengths of time:

• Three years from the date you file a return if the points below do not apply
• Seven years if you report a claim related to a loss because of bad debt or worthless securities
• Six years if you failed to include reportable income in a return that is more than 25 percent of the gross income that you reported
• Indefinitely if you never file a return or filed a fraudulent return

The IRS states that you should keep employment tax records for at least four years after the date the tax is due or the date you paid, whichever is later.

When in doubt, keep tax records for at least seven years. Before scanning tax documents and discarding them, verify that you will not need them for other purposes. In some cases, auditors, creditors or insurance companies may require you to keep them for longer periods.

Keep for Six Years

• Accident reports and claims
• Financial statements and records, including business ledgers and check registers
• Important correspondences
• Property records
• Sales records
• Purchase records
• Contracts with vendors and contractors
• Registration applications
• Titles, deeds, leases and mortgage records for property you no longer own or rent
• Human resource files
• Cancelled checks
• Bank and credit card statements

Keep for Three Years

• Improvement-related receipts
• Medical bills
• Stock records
• Vendor invoices

When to Scan Documents

The best time to scan documents is as soon as you receive them. While there are regulations regarding when you may dispose of documents, there are no limitations on when you may create digital copies. The greatest advantage to scanning documents as they arrive to your office—whether they’re simple receipts or legal documents—is that you’ll have them readily available if you need to refer to them in the future. Scanning paperwork also helps expedite document recovery if the originals receive damage.

A good document management plan includes knowing what records exist, when to dispose of them, and how to salvage them after a disaster. Be proactive about your firm’s disaster preparedness plan by taking advantage of Polygon’s complimentary Code Blue program. The program helps you create a document recovery plan, reduces the financial impacts of a disaster, and gives you priority access to our 24/7 services. Get in touch with a specialist today to schedule a consultation.