Every business needs solid bookkeeping practices. Part of that process is storing the financial documents that back up the numbers in your books. The Canada Revenue Agency (CRA) requires small business owners to keep financial records for at least six years. Depending on your industry or financial objectives, you may need to keep additional records or keep records for even longer. How you store your bookkeeping records is important for compliance with CRA requirements and for the security of your business information.
Physical Document Storage
If you haven’t fully digitized your bookkeeping records, you need a way to store and organize files of your physical financial documents and receipts. The CRA requires you to store those documents at your business location unless you get written permission for a different location. That means you need to create a physical storage system at your office to keep things organized.
Your storage system should keep the documents protected so they’re in good shape if you need to use them for your own reference or for a future audit. Keeping them within an organized system also makes it easier to find exactly what you’re looking for. A filing system is often the method of choice for storing hard copies of bookkeeping records. This method lets you use individual file folders to sort out documents of different types. You can also sort them in chronological order to keep the multiple years of documents organized. Labels on each of the file folders make it even easier to find exactly what you need when you have to pull old bookkeeping files.
Computer File Storage
If you don’t have a lot of digital files, you have the option to store them on your local computer. This option is easy because you don’t need any additional software or hardware to save the documents. It does come with some drawbacks, though. You’re limited on the amount of space you have for storing the documents. Since the documents are stored locally on your computer, it’s not as easy to share them or access the files if you’re not physically at your computer.
The digital security of your files is also a consideration. You can lose files or have them compromised from physical or cyber threats. If your computer crashes or gets hacked, those files become vulnerable. You can protect those files by keeping your system up-to-date. Firewalls, encryption, and antivirus software also help minimize threats. It’s a good idea to have a different back-up system for your files if your computer is your main storage method. You might use cloud-based storage as a backup, for example.
Digital records save you physical space in your office and keep your documents easily accessible without digging through file drawers. And since your information is on someone else’s servers, you don’t have to invest in hardware or devote space to files. Cloud-based storage keeps your files on a third-party server with easy access to your files from any device, which makes it convenient when you need to look back at something. In cases of fire, flood, or computer malfunction, you don’t have to worry about losing information since you don’t have physical files or digital files stored on a local device in your office.
Programs such as QuickBooks Online offer automatic backups to ensure you always have a copy of your digital documents. QuickBooks stores all of your accounting, bookkeeping, expense, invoice, and receipt information digitally — all in one place. That lets you easily create reports, review your data, and access the files when you need them.
Digitizing your physical documents is relatively easy. You can simply save the documents you need as PDF files to Google Drive or a similar service, or you can use a dedicated document management app, such as Hubdoc. When you use cloud-based storage, your documents are only as safe as the encryption and security methods used by the company offering the service, so it’s important to research the options carefully. Most cloud-based storage options are completely safe and take document security very seriously. QuickBooks integrates a number of cloud accounting security features to protect your data with top-quality encryption technology, SSL Certificate Authority, and firewall protected servers for your peace of mind.
USB flash drives are small and convenient, making them an appealing way to store digital documents on-site. With a flash drive, you can stick the equivalent of a filing cabinet in your pocket and easily carry it anywhere. Using flash drives is relatively simple, and once you buy the drive, you don’t have to worry about any additional costs. Flash drives work with any device with a USB port, making them extremely versatile and easy to share. They’re relatively durable and tend to withstand bumps and falls.
But there are drawbacks to consider. Small things are inherently easy to lose, so you may end up misplacing your flash drive with all of your documents. The storage size is also limited on a flash drive, which can be a challenge for larger businesses with lots of files to store. In the case of fires or other natural disasters, these storage devices aren’t as reliable as off-site, cloud-based storage and may be destroyed.
External Hard Drives
Another on-site option for digital record storage is an external hard drive. It’s a device you connect to your computer externally to boost its storage. The set-up process is easier than taking apart the computer and installing internal memory. You can use external hard drives to back up information that is already on your computer. Like flash drives, you simply pay once and never worry about the cost again. Generally, the more you pay, the more storage you receive. External hard drives take up a relatively small amount of space in your office, and although they are significantly larger than USB drives, they are still portable.
You have several bookkeeping record storage options, whether you have physical or digital files to store. Consider the pros and cons of each document storage option to find the methods that work for your situation. Or take advantage of QuickBooks Online and its integrated document backup features that keep you up-to-date automatically. Change the way you manage your finances now.
Information, ideas and opinions expressed on this website should not be regarded as professional advice or our official opinion and you are strongly advised to consult your professional advisor before taking any course of action related to them. Each financial situation is different, the advice provided is intended to be general, and such such, you are advised to consult your financial or legal advisors for information specific to your situation. The information contained in this website is provided ‘as is’ and your use of and reliance on the information is entirely at your own risk.