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Get Ready To Get Organized
Depending on the the amount of paperwork you have held on to, you may find satisfaction in starting with what you can toss or shred immediately. Then move on to planning your long term and short-term storage areas and file solutions. Files that are one to two years old should be kept more accessible and files that are 3 years or older can be moved into long-term storage.
By planning storage needs ahead of time, you'll be able to easily move your bank statements, tax records and other business files into the correct bins, file cabinets and cardboard boxes, depending on the date of the document and the tips below.
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There is no need to keep information such as memos, to-do lists, outdated form templates, etc. If you know that a piece of paper will not serve a purpose in the future, purge it now. There is no sense on taking up valuable storage space with frivolous pieces of paper.
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If space in your office is tight, you may want to set up an area of your home for long-term document storage. Areas that seem to work well for this are a corner of your basement, attic, or garage.
I recommend archiving files in cardboard file boxes by document type. Organize files in each box by year, with the most recent in the front. Label each box by its contents. This will make it easier to locate files later on.
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There are some business records that you will want to keep permanently.
These include your tax returns, general ledgers, payroll records (if you retain employees), year-end statements, and records pertaining to your retirement plan. Keep these records easily accessible for at least 2 years prior to moving them to your long-term storage.
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Bank statements, cancelled checks, accounts payable and receivable documents, leases, invoices (both to customers and from vendors), and contracts should be stored for 10 years. Keep these documents in your office for 1 year before moving to your long-term storage area.
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Employee agreements, litigation records, expense reports, and inventory information should be kept for a period of 7 years. Again, I recommend keeping these documents easily accessible for 1 year before moving to your long-term storage.
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Expired insurance policies, general correspondence, employee applications and benefit records should be kept for three years. You can move these documents to your long-term storage immediately unless you know you will need them soon.
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Stay Organized and Purge Documents Regularly
Once every year or two go through your long-term storage and purge any documents that have exceeded the necessary length of storage.
To retain confidentiality and prevent identify theft, it is definitely wise to shred documents before recycling or throwing them out. You can purchase a shredded fairly inexpensively at any office supply store.