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Filed Your Taxes? What Every Business Should Do Now

Posted May 05, 2016 by Lynn Brown

document management security

The scramble to file taxes is over for another year - and now it’s time to do some filing of your own.

From a records management point-of-view, it’s important to have guidelines and schedules in place that help organize this information. A comprehensive document management policy will also safeguard a workplace from risks of a data breach whether digital documents, cloud storage, or old-fashioned file folders are used.

The 2015 Cost of Data Breach Study showed that the average cost for each lost or stolen record containing confidential information is $217 with the total average cost paid by organizations at $6.5 million.

Here’s what to do with tax-related documents after tax time:

  • Review documentation. Meet with the tax team and Records Manager and review documents used for this year’s taxes such the previous year’s return, accounting and bank records, payroll reports, asset purchases, etc. Experts recommend a ‘tax organizer’ so that any information that might be required by the Internal Revenue Service (IRS) will be all in one place. Review taxation schedules and make necessary adjustments.   
  • Determine records retention. Depending on the specific information, most tax documents are kept between 3 to 7 years (and some indefinitely). It’s important to keep records that support income, deductions or credits on tax returns until the period of limitations for that tax return runs out. The IRS provides a guide.
  • Label documents. Best practices for storing and labeling documents include using a simple file-naming system that organizes documents and simplifies their retrieval, according to the document management strategy guide by Shred-it. Labels should clearly identify what the document contains, the date with year, and the keep-until date.
  • Put into storage: For document management security, store documents in a secure, locked location and/or in a password protected file. Provide document permissions with access given only to employees that need the information to do their jobs. Make back-up files of electronic records, and store them in a separate location. Paper documents that are no longer needed should be deposited into locked containers provided by a document shredding partner. Consider implementing a Shred-it all Policy so that any documents that aren’t needed are destroyed.
  • Schedule disposal. Schedule regular document destruction services. Keeping documents that are not required increases the risk of a security breach and non-compliance with privacy legislation. For example, since 2010, small businesses can deduct employee-provided cell phone use without documentation requirements – so those records can be destroyed.
  • Manage all documents: Both paper and digital documents must be securely destroyed when no longer needed. Shredding is the preferred method and a legal requirement for many paper documents.The only acceptable way to dispose of digital documents is to irreversibly destroy them as well (deleting data and emptying the trash bin from electronic storage does not permanently destroy the information). Schedule hard drive and e-media destruction.
  • Be sure there is proof: As part of records management, keep the Certificate of Destruction issued after every shred for legal proof and protection.  

Document management is just one of many best practices that help protect an organization all year long.

Let Shred-it help keep your workplace secure.

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