Whatever size business you are running, you can easily feel overwhelmed with paperwork. Receipts, invoices, bank statements, timesheets, insurances, it all mounts up! One of the best ways to keep on top of things is to archive your business records/documents annually.
HMRC say that records can be kept on paper, digitally or as part of a software program. Cloud based digital accounting packages are constantly developing and can now record/save digital copies of business documents, but here I am focusing on paper record keeping.
How long should you keep records for?
Self-employed – HMRC state that you ‘must keep your records for at least 5 years after the 31st January submission deadline of the relevant tax year’. Their example, if you sent your 2018/19 tax return online by 31st January 2020, you must keep records until at least the end of January 2025.
Limited company – HMRC state ‘You must keep records for 6 years from the end of the last company financial year they relate to, or longer if:
- they show a transaction that covers more than one of the company’s accounting periods
- the company has bought something that it expects to last more than 6 years, like equipment or machinery
- you sent your Company Tax Return late
- HMRC has started a compliance check into your Company Tax Return.’
Concern about disposing of old records often comes from that nagging doubt ‘what if I need it?’. If you would feel more confident and have the storage space, then you can of course keep records for longer.
How should you archive?
Invest in appropriate storage boxes – If you don’t want your documents to perish over time invest in storage boxes for your archiving. Use boxes that are all the same size. You can easily waste space if you are trying to stack boxes that vary in size.
Create a checklist – In order to ensure you don’t forget anything and that you remain consistent year on year with your records, create a checklist of documents to include at year end. You can also put it on the top of your archive box as an inventory.
Label clearly – Make sure you clearly label your archive boxes. If you have to look something up after its been archived, you want it to be easy to find.
Confidential disposal – To ensure you fall in line with data protection requirements, you will need to make sure that any business records you dispose of are done so securely. If you don’t want to spend hours putting it all through your own shredder, then you can always out-source. There are companies who will confidentially dispose of documents for you and provide you with a Certificate of Destruction for your records/audit trail.
Keep up-to-date – Archive when your year end accounts have been finalised. At this point you can gather everything together and file it away with a copy of your annual accounts. Depending on how long you have decided to keep records for it is also a good time to dispose of a years’ worth of records, i.e. one year in, one year out!
What are the advantages of effective archiving?
Free up space – If you have been keeping documents for longer than required, they can take up a lot of space. Archiving in a standardised way means you can keep the boxes to a minimum.
Locate documents easily – By archiving in an organised and consistent way, you should be able to locate historical documents as and when required.
Saves time – If you archive annually and have a process which you follow, it shouldn’t take you long!
If you have fallen behind, don’t have time or just don’t know where to start with archiving your business documents, then why not get in touch and see if I can help? I will provide a sensitive, secure and confidential service in line with current Covid-19 regulations.