Document retention

What it means

Accounting documents, books and financial statements are kept for ten years; payroll and some HR records for longer. The period runs from the end of the accounting period the record belongs to.

The law does not demand paper. An electronic archive is enough if the record is readable, complete and demonstrably unaltered: who filed it, when, and that nobody has changed it since.

Retention is not only about invoices. The books of account, depreciation plans, inventory lists, the contracts that entries refer to and the internal policies the bookkeeping followed must be kept too. A document torn from its context often does not satisfy an audit, because nobody can see why it was posted the way it was.

How it works in practice

In practice the archive is split: documents in the accounting system, contracts in cloud storage, payroll in the payroll package. What matters is one index of where things are and rights set by access management.

In a tax audit documents must be produced in readable form on request. An archive that takes three days to search stretches the audit and raises the odds something is never found.

When a client moves to us from a previous accountant, we ask for more than the documents: an export of the data from their system in a format that opens without a licence. For the handover we draw up a protocol stating which years and which kinds of records passed to us and what stayed with the client.

What to watch out for

Two mistakes cost the most: ending an accountant relationship with the data left only in their system, and deleting personal data under GDPR where an accounting document must carry it. Retention wins.

The second issue is format. Documents held in a program the company no longer uses and has no licence for are archived on paper but unreadable in practice. Anyone changing accounting software should export the old years to an open format and check that they open. And the archive needs data backup beyond a single disk or a single office.