Any business tends to be a hot house of paperwork, with it filling drawers, filing cabinets and boxes in any spare space your office might have. There are many things that you need to hold onto for financial, legal or GDPR reasons, as well as for insurance purposes, which can lead to many businesses never getting rid of anything for fear of needing it at some point in the future.
This can mean that you eventually become overrun by different documents, making them difficult to store, track and find. Here, we take a look at some of the best ways to streamline the financial document that you need to retain to make sure that they are easy to find, and also kept safe and secure.
Financial Documents
The financial documents that you need to pay the most attention to when working out a retention process should include any legal documents, tax returns, personnel records, payroll details, accounting documents and bank statements. Depending on the field in which you work, you may also have other financial documents to consider such as customer financial documents.
You need to have policies in place relating to how long each of these need to be kept, where they need to be kept and when you will know which ones are no longer needed. This can be a complicated process, and many documents can be found all over the place, are kept on file many years longer than they need to be, or worse, removed before they should have been.
The legal requirements of document retention
It is important to remember that there are legal requirements in the UK relating to document retention that it is essential you adhere to. There are set time periods that many different documents need to be kept for, and it is your responsibility to understand what these are and put policies in place relating to each one. A failure to do so can lead to penalties from HMRC.
Tax returns, financial statements and accounting records will usually need to be kept for a minimum of six years starting from the end of the last company financial year that the document relates to. You may be required to keep some documents for longer if you have purchased something which is expected to last more than six years, if the document refers to a transaction covering more than one accounting period, if the Company Tax Return was submitted late and if HMRC decides to start a compliance check into your Company Tax Return.
Most HR documents will need to be kept for at least three years, but payroll will fall under the six year bracket.
Creating a document retention strategy
It is important that all of your compliance and legal personnel are involved in the drawing up of a document retention strategy to ensure that all legal requirements are met and that any potential risk is minimised. Any trade organisations which relate to your particular industry may also be able to help.
Physical documents can take up huge amounts of space and are notoriously difficult to organise, so your first step should be to make digital copies of all of them. These can be scanned into your system and the paper copies can then be responsibly destroyed (unless there is a legal reason to keep the originals). This can free up huge amounts of space, and can make it much easier to organise documents once they are all in one space. Ensure that each document is properly named, including a date, when it is saved to ensure that it is easy to identify.
Once all of your files are digital, you then need an organisational strategy. You will need to define how these should be filed and think about any necessary access restrictions that might need to put into place. Certain files can be protected to ensure only employees with the correct levels of clearance are able to see, edit or delete them.
Once the documents have been put into some sort of order, you will then need to create a retention schedule. This outlines your right to keep documents and to remove them as long as you are within your legal obligations. The schedule should be clear on the time frames that each type of document should be kept for and can vary according to industry and specific business requirements.
Your policy will then need to outline how and when your documents will be purged and make sure that this is done according to the schedule that you have drawn up. It is advisable to set up any audit system to check that your policies are being followed, as failure to remove documents at the correct time could leave your business open to unnecessary risk as breaches could leave more documents exposed than you need to, and audits could leave you open to fines if things have not been kept as long as they should have been.
Once your document retention policy and schedule is in place, you should make sure that you review it on a regular basis. This ensures that you stay within any laws that might have changed, and if your business policies elsewhere have changed, you can bring how you deal with financial documents into line with this.
Creating a proper retention schedule for your documents helps to establish good practice within the business and ensures that everything is dealt with consistently. It can save you huge amounts of space and can also enhance the security of your document retention by ensuring nothing can be left lying around, taken home or lost on the train. It ensures that your business always stays within the law of the UK and within any recommended policies and guidelines or your particular industry. It can also be a massive time saver, by making sure any document can be found and accessed in a number of seconds, and any purge can be quickly organised and carried out with a minimum of fuss and disruption.
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