You don't need to keep each financial record you receive. Knowing which records you can dispose of will make the organization of the rest of them much easier. You will also need to find the right place to store your records.
Documents To Dispose Of
To make it easier to engage in record-keeping, you will need to know what papers you need to keep and which papers you should dispose of. Receipts that simply provide information needed in the moment, such as ATM withdrawal receipts and deposit slips, can be disposed of after you see your balance.
Documents That Don't Need To Be Kept Longer Than A Year
Receipts that are related to financial transactions should be kept for a year. They may be necessary for tax write-offs. You will need to keep paycheck stubs, credit card statements, mortgage statements and utility bills. While being necessary for tax purposes, they may also be needed to secure a loan. However, these largely become irrelevant after a year.
Documents You Need For A Longer Period
Final statements need to be kept for at least three years because the IRS has three years to find errors. They also cannot conduct an audit on tax information that is older than six years. If there is evidence that you committed fraud on purpose, there is no statute of limitations. Therefore, if there is a reason to believe that you may have committed fraud, you should hold onto records related to the incident for as long as possible.
Surprising Documents You Might Need
Permanently keep any documents that you believe can be useful when engaged in future financial planning. Documents that prove that you purchased a stock should also be kept indefinitely. There are also some financial documents that surprisingly need to be kept, such as documents related to home renovations. You may want to show these documents to a future home buyer.
Where To Store Your Documents
Have separate locations for each type of document. For example, you may want a tin where you can store all of your receipts while placing statements in a different location. Use a lockable filing cabinet to prevent your financial documents from being stolen.
The easiest way to store large quantities of financial information is to digitize it and store it on an external hard drive. By being connected to an external hard drive that you can store in a secure location, someone who gains unauthorized access to your computer will be unable to locate these documents. Digitizing documents causes them to take up less space and you can more easily search for specific documents. Either search by the title of the document or use tags if they are available on your operating system.
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