Although it may not be the most glamorous aspect of a successful business, keeping track of company archives is one of the most essential. Any business, no matter the size or scale, will accumulate important documentation over time that will need to be securely stored. This often sensitive information may or may not be needed in the future, but nevertheless will need to be stored for the length of time necessary. Failure to maintain proper archives can create cash-flow problems, slow down administrative processes and even lead to government fines.
So what’s the law?
According to government guidelines, limited companies must keep and maintain all “records about the company itself”, as well as all “financial and accounting records.” The particulars of these documents may be specific to your industry, but there are certain documents that all companies must be able to produce on request. These include staff information, debentures, indemnities, as well as all money spent and received by your company. More information about company and accounting records can be found on the UK government website.
Many companies unwittingly dispose of important documents that they are legally obliged to keep hold of. This is especially the case when paperwork is badly organised and left to build up in office filing cabinets. Employing an efficient archiving system is a fool-proof way to make sure your business adheres to its specific retention schedules. Data protection authorities now have the power to apply strict penalties to any companies that do not comply with their standards. You don’t want to be bitten when HMRC turn up to check your records!
The Companies Act of 2006 made it law for private limited companies to keep their accounting records for 3 years from the date they were created. Similarly, public limited companies are required to keep their records but for twice as long. Furthermore, tax law compels all private businesses to archive any records used to complete their tax return for 6 years, starting from the end of the initial accounting period. That’s a long time to keep hold of paperwork, emphasising the importance of keeping business records well organised and securely stored.
Organising your archives
As explained above, it is vital that company records are archived in accordance with business and legal requirements. To make the whole process easier, all important documents should be filed appropriately and as soon as possible. Delays in archiving or storing files haphazardly increases the likelihood of them being lost, damaged or accidentally destroyed. It may be time-consuming but the consequences of poorly maintained company archives can be detrimental to the success of your company.
Where to store your records
It is the responsibility of your company’s director to ensure all significant records are accurate, up-to-date and accessible for inspection by the relevant authorities. Many companies archive their records at their registered office address, while others choose to store them at Single Alternate Inspection Locations (SAIL).
Companies House, the UK’s registrar of companies, will assume that your company records are stored at your registered address. However, if you have chosen to keep some or all of these documents in a separate location – such as a professional storage facility – you will need to inform Companies House that this is your SAIL address. As well as its location, you will also need to divulge which of your business records are being stored there. You can only have one SAIL and it must be in the same country as your registered office.
Whilst the majority of documents in your business archive will rarely need to be touched, there will be occasions where you may need to gain quick and easy access to certain files. Any movement of documents outside of your office (or SAIL) will need to be tracked to ensure you know where your records are at any given time. Many of your archived records will be original documents, so it is imperative that they are not lost, damaged or destroyed. If they are, you will need to inform your Corporation Tax Office immediately.
To avoid running into the aforementioned problems, many companies devise their own tracking schedules. In theory, this records information on the whereabouts of a given document, who is currently responsible for its safety, when it was sent out and when it is due back. This practice is definitely advisable, but ultimately you should try to avoid sending out original records wherever possible. Nevertheless, we understand that releasing physical records is sometimes unavoidable and companies must turn to safe and reliable practices instead.
Although original paper files are needed by many organisations, it is becoming an increasingly common practice to simply send scanned copies of documents. Rummaging through a mountain of paperwork for a specific record can be a painful and time-consuming task if your records are disorderly. Keeping your archives securely stored in a professional storage facility may not only be the most secure option, some storage companies also make it the most convenient with their online document management and scanning services.