With a new year before us, it’s the perfect time to make space for new things and toss out old stuff. One thing people have too much is paper.
There are some papers you should hold on to, though. This is not an exhaustive list, but here are some things you should keep:
1. Books of accounts and other accounting records. As a taxpayer (whether as an individual, partnership, or corporation), you are required to keep your books of accounts and accounting records intact for 10 years (even longer, if you have unresolved open cases). Thankfully, the Bureau of Internal Revenue issued a regulation in late 2014 allowing taxpayers to keep their records of the sixth to the 10th year in soft copy. In sum then, you have to keep your records for tax purposes of the last 10 years, the latest five years in original hard copies and from the sixth to the tenth years in either hard or soft copies.
2. Official Receipts of important purchases. Keeping the official receipt for that 43-inch TV you bought last Christmas may be a hassle but your wallet will thank you later if you end up needing it for warranty or replacement purposes. Remember, too, that official receipts printed on thermal paper often fade over time or when exposed to heat, so making a photocopy of such receipts is always good practice. What’s an important purchase? If it hurts you financially to replace it, that’s important enough.
Aside from important purchases, you will also need to keep receipts for expenses you want reimbursed, or to support your record of expenses, whether for tax or other purposes.
3. Important contracts and legal documents. The original copy of the Deed of Absolute Sale to your condo unit should definitely not be in your throwaway pile. Of course, this rule also goes for the Owner’s Duplicate of the title to your unit, too. Always remember to keep the original records of your properties (your car’s OR-CR, land titles, etc.), investments (like records of mutual fund placements, stock certificates, even insurance policies) and government-issued documents (such as birth and marriage certificates and old passports). It is imperative that you retain originals of important contracts, titles and vital documents. You never know what legal issue might arise later and it’s important for evidentiary purposes that you keep your own set of originals.
Not enough space? Here are a few things you can get rid of:
1. Monthly account statements. You accumulate a lot of these for the accounts you maintain (bank accounts, accounts with your broker, rewards/points membership account, etc.). These statements can create a sizeable pile, but whether you will need them will depend on the circumstances.
2. Receipts. A lot of us accumulate a ton of these little things, from restaurants, coffee shops, groceries, etc. But which of them do you really need to keep? As discussed earlier, unless they’re receipts for important purchases you may claim a warranty on, or receipts for reimbursement or expense records, you’re better off tossing them.
For all other cases, these three criteria may help you decide what to keep or throw away. First, is it likely you will NOT be needing this document in the future? Second, if you ever need it, will you be able to retrieve a copy somewhere else? Third, will it be easy and inexpensive for you to get such a copy? If the answer to these three questions is yes, feel free to trash that document. But when in doubt, don’t throw out.