Taxes Done? What Documents to Keep and What to Shred
The end of tax season is a great time for companies and individuals to review all of their tax-related paperwork as well as other documents and to securely file or dispose of printed information that is no longer needed according to records retention guidelines.
While the 2016 State of the Industry Report by Shred-it showed a growing awareness among C-Suites and small business owners (SBOs) about the legal requirements of storing and disposing of confidential data, one-third of SBOs still think lost or stolen information wouldn’t have a serious impact compared to just 4% of C-Suites.
But lost or stolen information can increase the risk of a data breach, and there can be significant fines for non-compliance. Organizing and disposing of old paperwork will also improve the overall efficiency of a workplace.
Not sure what documents to keep?
Most businesses are required by law to keep confidential client, employee, and company data. The types of documents that are typically regulated include tax records as well as business contracts and other formal company documents, accounting records, personnel files, purchasing and sales documents, traffic files, and insurance documents.
Retention periods begin after the termination of the item and vary by country and according to the document and various federal, state, and local laws. For example, in the U.K., payroll records must be stored for 6 years while job application records must be kept for at least 6 months. In the U.S., employment applications must be kept for at least 3 years, and in some cases tax documents must be retained permanently.
Regulatory authorities such as the Information Commissioner Office (ICO) in the U.K. and the Internal Revenue Service (IRS) in the U.S. provide current requirements.
What documents should I shred? There are several categories:
- Documents past the minimum retention period: Holding documents longer than necessary increases the risk of a data breach and of non-compliance. According to the Data Protection Act in the U.K., secure shredding ensures irreversible destruction.
- Documents that have been converted to digital files: Some businesses are using electronic accounting software programs or other electronic systems to scan and organize records. The program or system should meet basic record-keeping requirements that apply to hard copy books and records.
- Post-it notes and other scraps of information: Writing passwords and other confidential information on post-it notes or scraps of paper is a common habit – and not recommended. Keeping information this way increases the risk of a data breach.
- Non-solicited credit card and insurance offers, and other junk mail: Any documents that include names, addresses, and other private information should be securely destroyed. A Shred-it All Policy is a good way to make sure all documents are destroyed when no longer needed.
For the secure destruction of data, partner with a document destruction company that has a chain of custody and provides secure shredding services. The company should have the knowledge and expertise to tailor document destruction services across all industry sectors. It should also provide a Certificate of Destruction after every shred.
Check Shred-it’s records retention guidelines for more information on which documents to shred and which to keep.