Since there is a very good chance you are working on your taxes right now (if you are done – way to go!) I thought this would be a great time to focus on filing. This is an opportune time to get rid of outdated documents by going through your old papers.
I must preface by saying I am an Organizing Expert, I am not an accountant or an attorney. These are systems that have proven useful for my clients and for myself. If in doubt, please contact your accountant or attorney for further professional advice.
Archive files are files that you rarely need to access. These files do not need to be in your office or in close proximity. They could be kept in the garage up in the rafters, in the attic or in the basement. They can be stored in a file cabinet, plastic file boxes, or corrugated bankers boxes. Whatever you decide to use be consistent and use the same kind. Doing this makes it easy for storage purposes and you will utilize your space efficiently.
Go through all of your files once a year. I like to do it at the end of the year, typically the week between Christmas and New Years. The reason to go through your files annually is get rid of the old and make room for the new.
Be very choosy on what you keep and remember most of this stuff will never be used again!
Some examples of what may be considered to include in archive files:
- Annual tax returns and supporting documentation – keep 7 years
- Audit reports – keep forever
- Year-end financial summary statements – once you have received the year-end statement compare to your quarterly statements. Assuming you approve the statements, shred the quarterly statements. Keep with your tax records
- Bank statements – Keep only if needed to prove deductions with your tax records
- Credit card statements – keep only if needed to prove deductions with your tax records
- Receipts – keep only if needed to prove deductions with your tax records
- Loan documentation – can get rid of once the loan is paid off
- Mortgage documents – as long as you own the home
- Receipts for home improvement/home repair records – as long as you own the home
- Receipts and warranties for any big-ticket items – keep the life of the product
- Memorabilia – be reasonable here. This category can get out of control really fast. Assign one bin per family member. When the bin gets full, something has to be removed before something else goes in. Do not have multiple bins per family member!
- Personal health records – keep indefinitely. Purge as necessary.
I will write about other kinds of files in future blogs.