In a previous article, we introduced you to the FAT system, a decision-making tool which helps you to process your paper. When sorting through paper, you have three choices, File, Act, or Toss. How do you decide what to File and what to Toss? In general, ask yourself these questions:

• Are there tax or legal implications? Discuss this with your accountant or refer to your company’s record retention policy. Assuming the paper does not need to be kept for tax or legal reasons, then ask these remaining questions.
• Does it require action? If so, keep it.
• Is it recent enough? If it’s out-of-date, toss it.
• Is it difficult to get again? Toss it if you have the information electronically or you can easily get it again.
• What is the worst possible thing that could happen if I get rid of this? If you can live with the answer, then toss it.

When we refer to "tossing" a document, we mean get rid of it. Tossing could mean throwing a document away in the waste basket, recycling it or shredding it. When getting rid of documents, make sure that you have the proper tools nearby. Every office needs a waste basket. If you are recycling, you need a place to collect these papers. If you are disposing of confidential information (credit card numbers, social security numbers, proprietary information, etc.), make sure you have a shredder. For additional information on these tools, please refer to the Helpful Tools section below.

We’ve included a few links to some general guidelines on how long to keep records. If you are unsure, please ask your accountant or records retention specialist in your office.

Residential
Deciding Which Financial Records to Keep (Real Simple Magazine)
Recordkeeping for Individuals (IRS)
How Long Should I Keep Records (IRS)

Small Business
Retaining Business Records (About.com)