The world is going digital, but a huge number of businesses still rely on paper. In many cases, business owners are legally bound to keep paper records for several years. That presents a serious storage conundrum for many business owners who may find they aren’t equipped to keep a large collection of paper documents onsite. Nobody wants to spend days at the office managing storage systems or searching for documents, so businesses must establish a coherent record keeping system that ensures every worker is on the same page.
Save the Right Things
This is a particularly important tip for small-business owners who may not know the record keeping regulations in their particular state or industry. While paper record keeping might seem outdated, it’s an essential part of tax preparation and can be required during a tax audit from the Internal Revenue Service. Entrepreneur magazine noted that it’s critical to keep detailed paper records of business purchases and expenses.
“Paper records are important for tax purposes.”
Checks and credit card statements may not be enough for tax auditors because statements do not provide adequate context for how a business spends money. To satisfy auditors who will carefully examine every cent of a company’s expenditures, business owners must supply itemized receipts. Record keeping strategies should incorporate a labeling system that makes it easy to locate files dedicated to a specific business purpose or merchant. These files should contain the original receipts if possible.
The Importance of Deadlines
While businesses need to craft a strong plan for keeping files on hand, they also need to build a system for throwing those same files away after the files have outlived their use. How long files need to be kept will change based on a range of legal and business conditions. The IRS recommended disposing of certain files at three-year intervals and others every seven years. A separate class of files should never be thrown out.
Businesses that strictly adhere to these cycles benefit in two ways. Disposing of outdated files cuts down on the amount of space that filing requires, and it also makes it easier to sort and locate the most important current files quickly. Business owners must regularly review the tax requirements for their specific organization to ensure they are maintaining adequate records as required by the local, state and federal government. These restrictions may change, so a policy for document destruction must be flexible to keep up with changing regulations.
Improve the System
Holding on to documents is practically worthless if the documents are poorly organized, so businesses need to apply a functional approach to document organization that prioritizes easy access to the most commonly needed documents. Maintaining an organized system is important for day-to-day operation, but also makes it easy for a company to incorporate elements of electronic record keeping into their existing system. Without a clearly defined organizational structure, it may be difficult to institute a hybrid approach that uses digital and physical records.
“Businesses can create digital copies of physical records.”
Regardless of how a business organizes its physical record collection, some element of digital backup is practically a necessity these days. Businesses can use a scanner or digital camera to create backup copies of every important piece of paperwork. By altering the names of digital images, it’s possible to create a searchable database of information that outlines the purpose for each digitized record. These copies are a good compliment for physical records, but not necessarily a replacement. Redundancy can be extremely important for a business that undergoes an audit.
Locate a Secure Storage Option
Businesses that want to keep physical documents onsite need to procure enough space to do so, and that can be a difficult task. The space needed for physical record keeping can add up quickly, particularly in large organizations. The U.S. Environmental Protection Agency, for example, estimated each employee results in 25 feet worth of paperwork. While 25 feet of documents may not be the case for every organization, an expanding business may need more record keeping space than an office can reasonably provide.
To avoid running out of space, business owners should look into external storage options and consider portable storage solutions early in their search. These units allow for secure document storage outside of the office but keep records close enough for regular review. With the patented Tri-Cam Locking System available on Mobile Mini’s secure storage containers, business owners can be confident that their records remain protected from everything from inclement weather to thieves.