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The CFO's Definitive Guide To Document Retention

The CFO's Definitive Guide To Document Retention

As Chief Financial Officer, you must organize all financial paperwork in order to protect the business from penalties, civil lawsuits and criminal charges. As the company grows, the amount of paperwork can be over- whelming; it is important that you and your team understand what types of paperwork to save, how to save it, and for how long it should be saved. Records related to setting up the business as well as tax records, receipts and invoices, employee documentation and other pertinent information should be saved. State and federal laws vary about how long each type of record must be kept – if you don’t have an organized storage system you might end up drowning in paper.

What Documents To Save

There are few hard-and-fast rules about what type of records to keep. However, you need to save all papers related to your taxes as well as papers demonstrating that your business is legitimate and follows all applicable laws.

When organizing your business documents for preservation, make sure you keep records of: Articles of incorporation and business registration, licenses, copyright and patent notices, year-end financial statements, tax paperwork, invoices and payments, personnel records, and general correspondence.

How Long To Keep Records

The amount of time to keep records differs by type. Some records need to be kept for only a year or a couple of years, while others need to be kept throughout the life of the business.

See our white paper for specific time requirements.

Consequences For Failing to Keep Accurate Records

There are financial and legal consequences for not keeping accurate records. Most record-keeping is related to tax laws, so be careful to keep records appropriately. If not, you might face the
following consequences: Paying extra taxes, tax adjustments after audits, audit failures, criminal penalties for improper licensure, inability to protect your business from theft, employee lawsuits, and deals falling through.

Storage Solutions

Keeping track of these different records and the length of time to save them can get confusing so it is important to be organized from the very beginning.

One electronic solution you can purchase is a virtual data room / online sharing space with secure sharing capabilities. This software allows you to scan documents into the storage system, organize them and give select authorized parties inside or outside company walls the ability to access them. Virtual data rooms are designed for transactions like audits, mergers, acquisitions, equity investment rounds, 409A valuations, patent management and equity investments.

Download the white paper, “The CFO’s Definitive Guide To Document Retention,” for a more detailed resource of what records to keep and how long. The white paper includes a “Document Retention By Years” table that identifies specific time period to retain documents by their type.

Download Your Copy Today