Re: when to thow away payable receipts

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Posted by Julie Signore on January 29, 2000 at 13:07:29:

In Reply to: when to thow away payable receipts posted by mary berg on January 04, 2000 at 14:31:27:

Aloha Mary,

First of all my apologies for the delay in your response. I *did* respond some time ago -- yet it was in the middle of my programmer making changes to the BBS & unfortunately the response landed in la-a-land. We tried to locate it because I had put so much detail & info into it ...yet luck was not on our side :)

So let’s see what we can do for you again.....

First of all, I can understand why no one wants to go near the files ...8 years of info is waaaaay to much to keep on hand. Your files are probably choking & taking up far more room than necessary. Do NOT go out & purchase more file cabinets -- I GUARANTEE we can get you the space you need working with what you already have!

OK -- some one needs to start removing all files *inclusive* of 1999. Last years files need to be moved to the bottom drawer “by vendor.” All other files need to be contained in a Bankers Box “by vendor” by year for archive purposes. (Note: filing by vendor in your situation is highly recommended.)

Designate the year on each box (on 5 sides) & put them in a storage area. The only reason you will need them is in the case of an audit. Now, as far as how long to save your records ....financial data needs to be held for 7 years -- this includes bank statements, checks, registers or any investment funds you may have created.

Your A/P & A/R records only need to be held for 3 years. Now many people feel this is not enough -- especially if they ever underwent an audit. Yet this is what my own tax attorney tells me. Check with your accountant/tax preparer if you feel the need to get a second opinion. Also remember, that the IRS has undergone many significant changes in the last 2 yrs. One of them is the “burden of proof” is now on the IRS -- not the tax payer!

Normally, I recommend that you keep all “prior year” information in the office area. The bottom file drawers will fill this need perfectly. Use the top drawers for *current* files for the yr. 2000.

Now, your patient records are a different story. I recently did work for a Dr. & asked him to contact the AMA to find out what the particular statute was for him. (For anyone else reading this -- I suggest the same -- contact your professional association if you are unclear what your particular staute is for retaining client records -- it does vary from profession to profession) In his case we were told 5 years.

One last important detail here for everyone: you MUST retain ALL of your tax returns -- permanently. I am referring to the schedules & forms etc...that are sent to you as a “copy” from your tax preparer. The size of this document is very small in relationship to the backup data & can easily be archived for years without being affected by space constraints.

Get in the habit of purging your records on a yearly basis. Once your taxes have been filed for the current year -- use the one in one out method for your backup paperwork & records. What this means is that when I file 1999 I will toss 1996 paperwork. All you need is 3 years on hand.

One last word on “record retention” on the financial level...for any of you dealing with 1031’s keep in mind that although you only need to hold the information for 3 years ...that the 3 years doesn’t start until the end of a 1031 chain. Example: if I purchased investment property in 1991, sold, reinvested in 1993...sold & reinvested in 1995 & sold WITHOUT reinvesting in 1998 -- you must keep *** ALL *** the records from 1991 to 1998 until the year 2002.

Hope this helps! Would LOVE to hear from you after your employees feel comfortable returning to your file system.

Much Aloha,

Julie Signore - CEO
1,2,3 SORT IT Organizing Solutions -- Innovative Tools
NSA Member, NAPO Member

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Comments:
: Aloha Mary,

: First of all my apologies for the delay in your response. I *did* respond some time ago -- yet it was in the middle of my programmer making changes to the BBS & unfortunately the response landed in la-a-land. We tried to locate it because I had put so much detail & info into it ...yet luck was not on our side :)

: So let’s see what we can do for you again.....

:
: First of all, I can understand why no one wants to go near the files ...8 years of info is waaaaay to much to keep on hand. Your files are probably choking & taking up far more room than necessary. Do NOT go out & purchase more file cabinets -- I GUARANTEE we can get you the space you need working with what you already have!

: OK -- some one needs to start removing all files *inclusive* of 1999. Last years files need to be moved to the bottom drawer “by vendor.” All other files need to be contained in a Bankers Box “by vendor” by year for archive purposes. (Note: filing by vendor in your situation is highly recommended.)

: Designate the year on each box (on 5 sides) & put them in a storage area. The only reason you will need them is in the case of an audit. Now, as far as how long to save your records ....financial data needs to be held for 7 years -- this includes bank statements, checks, registers or any investment funds you may have created.

: Your A/P & A/R records only need to be held for 3 years. Now many people feel this is not enough -- especially if they ever underwent an audit. Yet this is what my own tax attorney tells me. Check with your accountant/tax preparer if you feel the need to get a second opinion. Also remember, that the IRS has undergone many significant changes in the last 2 yrs. One of them is the “burden of proof” is now on the IRS -- not the tax payer!

: Normally, I recommend that you keep all “prior year” information in the office area. The bottom file drawers will fill this need perfectly. Use the top drawers for *current* files for the yr. 2000.

: Now, your patient records are a different story. I recently did work for a Dr. & asked him to contact the AMA to find out what the particular statute was for him. (For anyone else reading this -- I suggest the same -- contact your professional association if you are unclear what your particular staute is for retaining client records -- it does vary from profession to profession) In his case we were told 5 years.

: One last important detail here for everyone: you MUST retain ALL of your tax returns -- permanently. I am referring to the schedules & forms etc...that are sent to you as a “copy” from your tax preparer. The size of this document is very small in relationship to the backup data & can easily be archived for years without being affected by space constraints.

: Get in the habit of purging your records on a yearly basis. Once your taxes have been filed for the current year -- use the one in one out method for your backup paperwork & records. What this means is that when I file 1999 I will toss 1996 paperwork. All you need is 3 years on hand.

: One last word on “record retention” on the financial level...for any of you dealing with 1031’s keep in mind that although you only need to hold the information for 3 years ...that the 3 years doesn’t start until the end of a 1031 chain. Example: if I purchased investment property in 1991, sold, reinvested in 1993...sold & reinvested in 1995 & sold WITHOUT reinvesting in 1998 -- you must keep *** ALL *** the records from 1991 to 1998 until the year 2002.

: Hope this helps! Would LOVE to hear from you after your employees feel comfortable returning to your file system.

: Much Aloha,

: Julie Signore - CEO
: 1,2,3 SORT IT Organizing Solutions -- Innovative Tools
: NSA Member, NAPO Member

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