We live and work in an increasingly streamlined, organised, and paperless society. However, the responsibilities placed on company directors by the Companies Act 2006 is at odds with this outlook.
As a company director, the buck stops with you when it comes to running the business, preparing financial statements, fiduciary responsibilities, and acting in the best interests of the company’s shareholders.
And this typically means handling and retaining hard copies of many important business and financial documents to comply with legislation. Failure to do so can result in heavy financial penalties and, in some cases, prison time.
In this short blog post, we’re going to look at the company documents you’re legally obliged to retain, and for how long you need to keep them.
What Documents Do You Need to Keep?
Naturally, you are not expected to keep every piece of paper that comes across your desk throughout the lifetime of your business. The storage costs of such an endeavour would likely bankrupt even the most successful companies!
However, there are certain documents you do need to retain, and without further ado, here they are:
Document Type Time of Retention
- Sales Invoices 6 Years
- Purchase Invoices 6 Years
- Petty Cash Records 6 Years
- Tax Records for a Previous Employee 6 Years (plus current year)
- Tax Code Changes 6 Years (plus current year)
- Working Time Records 2 Years
- Job Applications and Interview Notes 6 – 12 Months
- Statutory Maternity and Sick Leave Records 3 Years
- Insurance Records 3 Years
- Director and Shareholder Meeting Minutes 10 Years
- Directors’ Contracts 1 Year from Contract Termination
- Fixed Asset Register Retain Permanently
- Annual Accounts Retain Permanently
- Customer, Supplier, Agent Contracts 6 Years after Expiry
If you’re considering shifting to a paperless system, you must ensure that the platform you decide to use is capable of producing hard copies of important company documents for at least the past six years. In some cases, auditors may wish to inspect the original document, so filing and retention of hard copies of invoices and contracts must also be considered prior to ‘going paperless’.
Should Your Accountant Retain Documents?
In short, yes. Your accountant should retain the following documents, among others:
- Copies of your company’s financial statements
- Corporation Tax calculations and returns
- Director Self-assessment Tax Returns (if your accountant prepares these on behalf of directors)
And if your accountant’s office acts as the registered office of your business, they should also keep your company’s Articles of Association and Memorandum.
Don’t Get Caught Out – Get Organised Now
As a company director, you are duty-bound by important legislation to maintain accurate and up-to-date accounting records, and retain historic company documentation.
A range of third parties can request copies of certain documents at any given time. From shareholders and auditors to your accountants or HMRC, when they ask to see a particular document from a particular time period, you need to be sure you can access it. This, of course, requires a high level of organisation and efficiency within your business.
By maintaining a document retention system – both online and real-world – you will avoid a myriad of future problems. And if you’re still unsure as to which documents you need to retain, or how to get started organising your records, we can help. As ever, we’re only a phone call or message away.
Contact us today to speak with one of our friendly advisers.