Paper Retention Guidelines

With the 2010 calendar change, many people are thinking “out with the old and in with the new.”

Sounds simple, but with paper, the yearly file purge entails knowing what to keep, what to toss, what to separate and how to blend old tax returns and new owners manuals. These are general guidelines to give you an idea on how to start the process of clearing out personal papers.

Some things should never be thrown away: Birth certificates, social security cards, trust documents, marriage/divorce/adoption certificates, retirement records, etc. Consider storing your permanent papers in a safe deposit box or fire safe.

Business records need permanent storage: Permanent files are needed for financial statements, licenses, corporate documents, receipts, etc. Permanent files should be stored in a separate filing cabinet away from daily action files.

Keep tax records for 6 years: Your particular situation will determine the length of time to keep old tax records, anywhere from 3 years to forever. Ask 3 people and you will get 3 different answers, even with accountants! Tax laws change every year as noted on the IRS website: www.irs.gov so the best rule is to consult your accountant or attorney who is familiar with your life situation before throwing anything away. “When in doubt, ask!” Plastic storage bins with tight fitting lids are a better storage option since plastic protects papers from bugs and humidity.

Keep general household bills for 1 year: Non-tax related papers like bank statements, utility bills, credit card receipts, miscellaneous purchases, etc. Set up a simple filing system with file folders and labels. These will be accessed monthly and purged yearly.

“What do I do with this” category: Common sense plays a big part in hanging on to warranties (keep a long as you own the item), bank deposit slips (until reconciled on your bank statement), insurance policies (keep for the life of the policy), etc.

Organization is key. Active, reference, and permanent are the three main categories for paper retention for both office and home. Keep active files close at hand, reference papers easily accessible and permanent files should be clearly labeled and stored in a safe place. Clutter happens when you mix the three and have 2002 tax returns on top of last month’s bank statement in the kitchen. With these few simple tips, you can continue bringing a fresh start to the New Year with files that work for you!

For more information on paper organization and filing systems, contact Lisa Phillips at lisa@allspacedout.biz or call All Spaced Out 205-621-7717. Workshops are available for creating a customized filing system for homes and businesses.