It is very easy for anyone who lives in this world to accumulate paperwork and documents. Some documents are not significant and could be discarded straight away. Others, you may need to store for years (e.g. tax receipts) or forever (e.g. your birth certificate). If you have a family with kids, own a house or run a small business, you would know the significance of keeping important paperwork safe and secure. You are responsible for the safety of your important documents and for protecting them from natural disasters such as fires, flood and theft. Modern age and technology has presented a new problem that makes it even harder to keep track of important documents. In the past, there were no electronic documents and all the paperwork could be stored in one place such as a filing cabinet. Now half of your documents are electronic and scattered throughout your email accounts, online portals such as student loan providers or tax agencies, banking websites or cloud services.
Your Important Documents – What You Should Keep and What You Should Discard
It is very easy for anyone to accumulate documents. Most of the time, we end up with a giant pile on our desks, drawers or kitchen cabinets. The pile contains both important and pointless documents like ATM receipts. Same thing applies to electronic-only documents such as receipts from eCommerce sites. They are scattered throughout our email accounts – getting buried under emails. In this blog post, we’ll discuss which documents you should keep and for how long, and which ones should you discard or shred.
Original Documents You Must Keep Forever
These are important documents that you need to keep forever (or until the document is not needed anymore) as opposed to say your tax receipts which you only need to keep for a few years.
- Birth or Death Certificates – Original. Forever
- Social Security Cards – Original. Forever
- Driver’s License or ID Cards – Original and Latest.
- Passports – Original and Latest.
- Marriage License or Divorce Certificate – Original. Forever
- Pension Plan – Original. Forever
- Wills or Power of Attorney – Original and Latest.
- Mortgage or House Deeds – Original and Latest.
- Insurance Policies – Good to have original, but digital copy is sufficient in many cases
- College Degrees or Certificates – Original. Forever
We highly recommend that you digitize these documents using Paperistic and keep originals in a bank’s safe deposit box or a fire-proof safe to protect them from fire, flood or theft.
Documents You Must Keep for a Period of Time
These are the documents that you only need to keep for some period of time. With most of these documents, you can safely digitize them and discard or shred the original to reduce the paper clutter.
- Tax Receipts – Keep for up to 7 years. Lose the original. IRS accepts digital.
- Tax Returns – 5 years. Digital.
- Bank and Credit Card Statements – 5 years. Digital.
- Pay Stubs – 5 years. Digital.
- Medical Records and Bills – At least 5 years. Digital.
- Warranties – Keep as long as they are valid for.
- Shopping Receipts – Keep for at least 1 year in case you need to return an item or dispute charges. Digital.
- Insurance Policies – As long as they are valid.
- Pet Records – At least for 5 years.
Use Paperistic to Capture Your Documents
Paperistic is a free app that allows you to quickly capture your paper and electronic documents and store them in one central location. Paperistic is designed for document management and all features are tailored for this purpose. It uses bank-level security to protect your information. You can access your documents 24/7, from anywhere. For example, you can capture receipts and statements by taking high quality pictures using the Paperistic app on your SmartPhone and discard or shred original copies to reduce the clutter. Specify a retention policy after which your document will be archived – i.e. you could specify that a shopping receipt be kept for a month in case you want to return an item.
Are you interested in taking the pain out of managing your important paperwork? Please visit our homepage to sign up for Paperistic. Thank you.
Does the IRS recognizes photos or scanned receipts as proof of expenses?
Filing small business taxes usually involve a lot of work. It could take anywhere from couple of hours to several days depending on several factors such as the size of your business and how organized you were throughout the year in tracking your earnings and spending.
After you have filed your business taxes (and the manner in which you filed them), the IRS requires you to keep proof of expenses for several years. Proof is usually in the form of a sales receipt. Without adequate records, a tax audit might result in financial penalties. Although the IRS doesn’t require you to show receipts for expenses under $75, most businesses still keep them to avoid getting into any costly arguments with the IRS.
How To Keep Your Paper Receipts From Fading
Many people just say “no” when asked this question. It makes no sense to add to the paper clutter by keeping paper receipts for small, personal purchases. Entrepreneurs, on the other hand, know that keeping sales receipts can save time and money down the road. Generally, small-businesses are not required to show receipts for expenses under $75. But savvy business owners know better than to get into an argument with the IRS — it can cost a lot more money and time than just keeping receipts. You might want to hold onto your receipts for reasons other than tax: may want to return items later, claim rebates, extended warranty or to simply protect yourself from unauthorized credit card charges.
Keeping receipts for valid reasons is important — but what happens when you have the receipt but it has degraded to the point of being unreadable?
10 Common Tax Mistakes Startups Make
Tax deadline is just around the corner. Sometimes even a straight-forward individual return can be quite a challenge. Things get more interesting when you add the business complexities associated with a small business or a startup. For many new entrepreneurs, filing taxes can be a real learning curve.
Most of us are aware of IRS audits and the associated pains. But what most entrepreneurs often don’t realize is that they often overpay Uncle Sam by committing small mistakes and overlooking various tax deductions.
Paperless Techniques to Stop Wasting Away Your Time
Couple of days ago, I received a link from a colleague to an article. The author talked about how his company declared war on paper by taking extreme measures such as hiding printers in hard to find places and getting rid of toilet paper from bathrooms (they installed Aqua Clean WC which cleans with water).
Gotta love the modern workplace.
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