Bills and Invoices: How to Keep Your Files in Order
What Documents Does a Private Individual Need to Hold On to?
There are various files that a private individual needs to hold onto, these are the files that you will naturally acquire while carrying out a normal life. To make things simple, we will divide them into personal records and professional records.
The following files are all things which you should hold onto forever. Although you may not receive all of these files in your lifetime, these are some of the most common personal records that you need to keep:
- Social security card
- Birth certificate
- Marriage license
- Personal will
- Adoption papers
- Government-issued identification
- Proof of Insurance
- Vehicle Registration
- Real estate or rental records
- Degrees, diplomas, & other educational certificates
In the event that you lose any of these files, you can usually receive new copies after going to the relevant office location, waiting in line, and (usually) paying a fee. There are also files that need to be routinely updated. This includes lease agreements, insurance, and vehicle registration.
Professional records are important to hold onto since they will make your life much easier. As a general rule of thumb, each of the following files should be held onto for at least three years.
- Tax returns
- Bank statements
- Credit card statements
- All receipts
- Home improvement bills
- Medical bills
- Utility bills
- Paycheck stubs
- Proof of debt payments
What Files Do Small Businesses Need to Hold Onto?
The files you need to keep, and for how long, is a little more complicated for small business owners. As we explore the many different files that businesses need to hold onto below, we will indicate how long they should be kept.
Ownership Records and other Formation Documents
When you start a business, you will receive files which contain prove your ownership of the business. Then, you will also receive important information such as your business account information, and so on. Each of these files should be held onto for the entire life of your business.
When you make any sort of business agreement with somebody else, you need to keep a record of it. Whether it is something small like paying a one-time sub-contractor or a long-term contract, you should hold onto business agreements for at least three years after the contract expires.
All Tax Records
We recommend you to hold onto your business tax returns for at least three years. There are various exceptions to this general rule of thumb, though. At the maximum, you should keep tax returns for 7 years. If you are concerned that you filed incorrectly, miscalculated your income, or made any sort of mistake, you should hold onto all your tax returns for 7 years.
All Expense Statements
Remember that many business expenses are tax-deductible. Then, each year you will need to know all of your expenses in order to properly calculate your business income. From small expenses like gas fill-ups and credit card statements to larger expenses like property payments, you need to keep all your expense files for at least three years. To best protect your business, though, hold onto them for 7 years.
Any sort of employee record you have should be held onto. This includes applications, hourly wages, contracts, taxes, payroll records, and any sort of injury or illness records. This is all to watch your back. In most cases, you can throw away employee files three years after the termination of employment.
Can I Hold Onto Digital Files Instead?
As we explored above, holding onto physical documents can quickly start to take up too much space. If you are a bit overwhelmed by the sheer size and number of files that you need to keep, you should definitely start using digital records. In the modern world, it is now possible to track all expenses by scanning receipts, contracts, employee files, and so on.