Financial Records – Be Careful Where You Toss Them!

As we are rounding the corner of the first decade in the 21st century, the term Identity Theft has unfortunately, become a household name. Thieves are finding new ways to use and abuse stolen financial data, often creating nightmares for their victims, who must spend countless hours repairing the damage.

While identity thieves have expanded their repertoire to include medical records, pay stubs, and even school records, financial data is still the most coveted and sought out data by identity thieves. Financial data includes your credit card receipts or statements, bank statements, tax related documents, as well as retirement/IRA and brokerage records and house records (such as mortgage and property tax statements). Even in this technological age, it seems we are still swimming in paperwork, and eventually it must be tossed. Knowing what to toss and when can be tricky for most consumers.

Generally, financial experts advise to keep credit utility and other household bills only until you receive the cancelled check. Credit card statements should be kept longer – about seven years (though receipts only need to be kept until your monthly statement comes and is reconciled). It is advised to keep paycheck stubs only until your end of year tax statements come, and bank records can also be tossed after one year. Other financial paperwork, such as IRA, retirement statements, and house records (deeds, titles, etc) should be kept permanently.

So what is a conscientious consumer to do with all of those old financial statements containing such dangerously identifying data?

Shredding your old financial records is an excellent way to protect yourself from identity theft. One of the most popular ways for identity thieves to get your personal information is through “Dumpster Diving”, in which crooks rummage through trash bins looking for papers with personal information on it. By shredding your old financial records with a good quality shredder, you are completely eliminating the threat of dumpster divers.

Small businesses and corporations typically produce a large volume of paperwork with sensitive data, and professional shredding companies are becoming more and more popular. A professional shredding service allows the business owner to easily and safely get rid of their unneeded financial paperwork, and the service is usually very cost efficient.

There is no doubt that identity thieves are here to stay. The good news is you do have ways to protect yourself. Being diligent with where and how you get rid of your financial records is one excellent way to keep your identity safe.

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Maintain Financial Records

Keeping Financial Logs is Always Good Tax Advice

If you want good tax advice, this is something you shouldn’t ignore. It pays to always keep records of your tax returns, tax credits and claim benefits.

If you don’t know how to go about recording your tax histories and other financial activities, HM Revenue & Customs (HMRC) offer these tips.

Tax Advice: Why Financial Records are Important

When you have an effective system for logging your financial activities, you can monitor your expenses better. No longer will you have to wonder where your money went. Here are other advantages of keeping records.

1. Quickly see if anyone owes you money or if you owe anyone
2. Cut down on accountancy expenses
3. Save time counting your finances
4. You can make sure you receive the right amount of credits and benefits
5. Pay the right tax amount
6. Avoid penalties and you don’t have to pay extra tax

Another thing, when you give HMRC a tax return, you may be asked to present your records to see what your used to complete your data. It’s imperative that you enter the right figures in your tax returns.

Are There Penalties?

You may face penalties of your records aren’t adequate or if you don’t keep records at all.

More importantly, what’s the point of keeping records if your tax return you send is inaccurate? You can still face a penalty if your returns aren’t correct. With reliable records at hand, you can avoid this penalty.

On the other hand, it’s natural to make mistakes. Even HMRC isn’t safe from human error. If you made an error, but can prove to HMRC that you’ve been responsible about making sure the return turns out right, you won’t pay any penalty.

Here are areas you should not neglect to take care of:

• Keeping complete records and make sure they’re updated. Save them securely.
• If you meet a bump in the road or find something you can’t understand, contact a tax advice expert, accountant or HMRC.

What Information and Records to Keep

There are all sorts of records that need to be kept, but the type of information you want to keep should suit the kind of tax you pay. Some of the most common financial logs to keep are:

• Benefits and expenses
• Capital Gains Tax
• Construction Industry Scheme
• Trustees
• Corporation Tax
• Self assessment – directors and individuals
• Partnerships
• Self-employed

How do You Keep Financial Logs

HMRC hasn’t stated exactly how to keep records. To make sure you get everything right, make sure not to lose original paper documents, especially those that say tax has been deducted. Other documents can be stored electronically, like using a memory stick, CD, or a computer.

It’s generally accepted that these records should be kept at least six years, except if you’re an employer or contractor because they have to store records for three years at least.

The last tax advice would be to make sure not to destroy important documents and records of any sort.

How to Organize Your Financial Records

Managing your finances can be stressful enough — there’s no need to make it harder by struggling with a mess of papers. Here’s how to use a simple, two-rule system to organize all your financial records, and how to keep them organized going forward.

1) Break everything down into three categories: taxes, debts and assets.

If that’s not specific enough for you, you can create five categories: taxes, debts, assets, bank statements and utilities. If five categories seems stressful right now, just stick to three.

If you are dealing with just a totally unorganized pile, this is a good way to start. I give taxes their own category because they are usually why people have to get everything organized anyway. Things that go in the tax “pile” or bucket include tax returns from past years, any tax-related forms or statements for taxes (like your annual mortgage interest deduction statement).

You should be able to do your taxes with just what’s in the tax pile. If you itemize deductions, you will need those bank statements, but I find it best to create a comprehensive list of all my tax deductions (with date, account paid from, what I paid for, who I paid it to, a category and a column for notes) and then put that in my tax folder, and then keep the bank statements in the assets pile going forward.

The debt pile includes documentation about any money you owe. Your mortgage and student loan paperwork goes here, but so do your credit cards and your phone and your cable bills. The phone and the cable bills are a little fuzzy (if you want more than three primary categories you can add a whole category just for “utilities”), but as they are things you make regular payments on, and thus have to manage due dates and payments for, I tend to lump them in with debts.

2) Organize all your categories (or piles, if that’s more accurate) into past, present and future.

Get yourself some file folders now, a good label maker, and a box or a file cabinet to hold the folders. I like to get colored folders, and then organize my five categories according to the five colors of file folders. That way I can tell what a folder is for from across the room. This makes picking up my office go faster.

If something is more than a week old, or has already been paid, its past. I keep an annual folder for everything, so there’s a 2010 phone bills folder, and a 2009 phone bills folder. Anything more than a year old goes into a plastic file folder label with the year, so everything related to 2009 can be stacked in storage. For past tax returns, though, I keep all my past tax returns in a fire-resistant metal box. You can throw out tax returns older than seven years, but I don’t.

“Present” files include bills you need to pay (these get their own folder) and paperwork associated with things you need to do (these also get their own folder). I put these two folders in a very prominent place, in a wall-mounted plastic file-folder wall organizer.

The “future” files include paperwork for projects I want to do (like a trip to Greece). This is a small category, but it can be helpful to have. Some people make a “tickler” file, not necessarily for financial documents, that has a folder for every week of the year. Then they can tuck papers that they want to be reminded of in that week. Tickler files are great for season tickets, and for planning weekend trips and seasonal projects.

Financial Record Keeping – Why It Is Crucial to Build Wealth

The rich know a simple secret to building and managing wealth. They pay attention to it every day. This is a process common to every person who has successfully built a fortune.

If you do not pay any attention to how you spend your money or where it comes from you are not likely to build wealth. People who are successful at building wealth keep careful track of how they build that wealth.

Most people make a haphazard effort at tracking their finances. They are unable to tell you where their money goes on a daily, monthly or annual basis. There is no plan or budget. Most people spend money “as the need arises” with no thought as to how it all fits together. Consequently they have no control over how they spend their money because they do not know how they spend their money.

The First Law of Wealth Management

The first steps toward building wealth are managing it. To manage wealth you make sure that you always spend less than you earn. This is the first law of wealth management and it is essential to building wealth. As long as you spend what you earn, or more, you remain in debt and you build no wealth. It really is that simple.

You have heard it before – pay yourself first. You must save some portion of what you earn if you ever hope to build wealth. You must systemize this process so that it happens every month, year in and year out. The power of this method is tremendous.

Keeping Track

The only way you can really get control of what you spend so that you can enforce your commitment to save a portion of all you earn is to keep track of what you earn and what you spend. This is the first and most fundamental step. It must become an ingrained habit.

People who build and wisely manage wealth know where it comes from and where it is going and they know this through constant record keeping and review.

You can start simply by setting up a simple budget of what you spend every month on fixed and variable expenditures. Mortgage payments, auto loan payments, and your monthly contribution to savings are examples of fixed expenditures. How much you spend on food, gasoline, auto repairs, and electricity are variable. There is always a greater degree of discretion with variable expenditures.

You can shop for cheaper rent or mortgage payments, or cheaper auto insurance, but for the most part you will be most effective at controlling expenses by watching variable, or so called discretionary spending. You can only watch it and control it if you keep records on it.

Use the method that works best for you

Different people prefer different systems. Some like to use old fashioned paper systems like ledger books. For many today though computer programs like Quicken or Money make record keeping easier and more accurate. Whichever system you choose your commitment to using it every day and every month is essential to effectively managing expenditures and investments.

Tracking Income

Over time you should have income from various sources. In addition to income from a job or business you will have passive income from investments. Different sources of income will perform at different rates. You must track how your investments perform, how our business performs and how these performance rates change over time to get an accurate picture of what is working best.

The success expert Brian Tracy teaches that people who pay attention to their money attract more of it. There is great truth in this. If you are careless with you money or pay little attention to where it comes from or where it goes it will slip through your fingers.

How to Create the Financial Record Discipline

Keeping good financial records is essential to managing your wealth. To develop this discipline resolve to maintain accurate and complete financial records for one week. Track all of your income and expenses for one week. You will be surprised especially on where it all goes. You will learn a great deal about your own attitude toward money.

Once your first week if over resist the temptation to drop this practice. Continue to track your expenses and income for a month. Analyze what you have tracked. Learn from it. Study how you can save more, spend more wisely and even improve income.

Now resolve to continue this discipline for six months. As each month passes you will gain more insight into how you spend and you will gain more control over your money. The more control you gain the greater your ability to build wealth.

After six months of faithfully tracking your finances you will have developed a wonderful habit. You will no longer feel comfortable ignoring how you use money. You will build confidence in your ability to control your wealth and build it. As your confidence and sense of control increases your ability to build wealth will increase.

This process costs you very little but some time and effort. It will pay you back beyond your expectations. Continue this practice and you will be on your way to financial independence.

Daniel R. Murphy writes on personal development, leadership skills, time management and how you can build wealth and financial independence.

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Financial Record Keeping – The First Pillar of Financial Success

We all agree that every strong structure needs a solid foundation to prevent it from crumbling to pieces. This foundation is the basis or shall I say is necessary in order for a structure to withstand the earthly elements and be around for awhile. Well it’s the same in business. Your business needs to have a strong foundation to ensure that everything you have worked so hard for doesn’t crumble to pieces. You cannot be so caught up in the busyness of your business that you don’t take the time to track and monitor the metrics in your business.

In my opinion, there are four foundation pillars that your business needs to have in order to stand the test of time. If all four of these pillars are present, your business will have a solid and sturdy foundation. If you take one or two of the pillars a way, your business structure will become unsteady, begin to shake and eventually crumble.

These four pillars not only help you lay the foundation for your business, or fill the cracks within the foundation of your already established business, but they will also help increase your bottom line.

I am going to share these pillars with you one by one over the next four weeks while also explaining how you can implement each pillar into your day to day back office processes.

The first pillar is Financial Record Keeping. This pillar focuses on bookkeeping and accounting services, tracking your inflows and outflows, reporting. It’s important that you consistently track the numbers in your business. It is the only way you can really know what is going on in your business. You have to know your numbers before you can grow your numbers.

Financial Record keeping requires consistent recording and tracking the of the cash inflows and outflows of your business. Financial Record Keeping is not keeping all of your invoices, statements and receipts in a box or in a folder in the corner of your office never to be seen again.

Cloud accounting software today have made it super easy to maintain your records. You can connect your bank account directly to your accounting software so that you no longer have to key in every transaction. Once your account is connected it will download all of the transactions that cleared the night before and place them in a “holding chamber” until you are ready to review them and post them. That’s right no more data entry.

In order to do this consistently, you can develop a step by step process, document it and follow it to a tee or train an employee to do that. You can also hire a professional bookkeeper or accounting practice to assist you with the set up and implementation of this process.

Staying on top of your day to day record keeping will help you find the money leaks in your business, and over time reduce costs and increase revenues.

Keeping Financial Records for Your Business

Thinking of starting up a business? In most cases there’s a lot of ground to cover once you’ve been hit with that creative flash of inspiration and setting up an efficient system for record keeping is usually a part of that.

Keeping a detailed log of your finances may be low on your list of priorities, but doing so can play a vital role in the success of your startup. Not only that, but he law requires that businesses keep accurate financial records and good bookkeeping may save you time, money and worry later on should you need to produce a financial report.

Your records should include all receipts, invoices, all goods that you purchase or sell, bank statements and relevant details relating to staff payment if you are an employer. The details of which records to keep will vary according to the size and type of business that you run, but you should be aware that you may be liable for financial penalties if you do not keep adequate records.

Though many businesses still prefer to keep their records on paper, tucked away in files, increasingly, in an age when business is ever more reliant on technology, many are opting to computerise their record keeping system.

Computerisation can allow you to update, amend and share your records remotely. This can make record keeping software a useful tool in keeping up with your company finances, particularly if you choose to outsource your accounting, or if you would like to keep a tab on the record that an employee is keeping on your behalf.

As a general rule, by law businesses need to keep records of financial transactions for a period of at least six years, though the length of time and the exact records that you will need to keep may vary according to the type and size of business that you run.

When in the process of setting up a business, keeping accurate and adequate financial records may simply feel like a pain when your time and resources are likely to be stretched. Nevertheless doing so could have a number of benefits for a fledgling business, including providing evidence of the financial foundations of your company should you seek to obtain additional finance from outside sources.

Whether you choose to do it yourself, assign the task to an employee, or outsource to an accountant, keeping accurate detailed records of your business can help you on the path to building firm financial foundations.

Understanding Your Financial Records

There are a few main financial record statements that you will need when going to a bank for a loan or to do your own personal net worth statement. They are your mutual fund, brokerage, bank, and loan statements. These should come in the mail monthly or quarterly. If you have online accounts, then they should be available under the My Account section of your website. You will need to gather all of these to start. A good idea would be to get them all together once a month and go over them. Don’t forget your life insurance statements if you have those as well.

Online bill pay options from your bank are a great way to keep up with your records in today’s world. The need for paper is really going away and will soon be gone, at least as far as bills are concerned. If you make payments online, you can track your expenses very easily. It’s really just a click of a button and there you go.

Your mortgage statement should have the interest rate, principal amount, and how much time is left on the mortgage. You can also see just how much money is going towards the principal of the house and how much is going to the bank each month. You want to make sure to know where you are at all times.

Your brokerage account is a little more complicated to go through than just a normal bill. You can do most of these online though, making it much easier. Most of the time you can print off your statement, if that makes it easier to read, and then do it. Make sure to calculate how many shares of what company you have and how much they are worth at the end of that month. You should know how much value you have in their at all times.

If you are trading stocks, then you should belong to an online brokerage firm. This should also allow you to do research to find which companies have great balance sheets that you should consider for investing in. Make sure that you choose a good service to use online if you are going to do it yourself. You can still hire someone to maintain your portfolio if you choose to do so. Just don’t let this be a reason for not educating yourself about stocks, bonds, and mutual funds.

How to Keep Your Financial Records Organized

People just have too much paper to deal with – even though computers were to help us in that area – it just has not happened for most of us. I am going to offer you some quick tips to help you in keeping your financial records and receipts organized throughout the year.

1. Monthly Transactions. I have found that this system works well for many small business owners. Create a file folder January through December. Keep two months on your desk (January – February; April – May) in an area that is easy to get to – colored file folders really help too. When you make an online purchase, print out the receipt and place it in the file folder marked for that particular month. The same holds true for those toll receipts or the lunch you purchased when you met a potential client. When your credit card statement comes in, and after you have paid the bill, place the statement along with your month-end bank statement in the file folder. Now you can either send the file to your bookkeeper or if you are the designated bookkeeper, once you have reconciled your accounts file the completed month away in your file cabinet.

2. Client Invoices. When a client invoice is prepared, print out an extra copy and file it in an invoice file marked for that particular year. At the end of the year you will have a record of all the income you have billed. In case of a computer hard drive crash, at least you will have a record for tax purposes.

3. Mileage Log. You can easily create a mileage log in Excel to track your trips to client meetings, running to your local office supply store to purchase the ink cartridge that just ran out or perhaps the run to the post office for postage or mailing of the proposal to a new client. We also can’t forget about the networking events that you are attending as part of your stepped up marketing plan. The spreadsheet should have a column for date, odometer start/end, total miles, and description.

4. Out of Pocket Expenses. For those cash outlays we do throughout the year – the coffee at the airport, the tolls paid to a meeting, or the quick lunch at a seminar, keep these receipts in a colored envelope marked with the year and keep track of the expense in an Excel spreadsheet. You can then total either monthly or quarterly and reimburse yourself for those expenses. Please be sure to hand off the receipts and the spreadsheet to your accountant at year-end.

5. Tax File. Create a tax file folder at the beginning of each new year. Throughout the year, place any tax related expense in that file such as medical receipts, prescriptions, monthly or quarterly investment statements, property tax bills, and year-end bank interest statements. At the end of the year when you are gathering paperwork for your accountant, most of the information will already be there for your accountant and you won’t be wondering where you placed the tax refund notice you received in April.

6. Bank Statements. For those that do not receive monthly bank statements in the mail, I suggest you create a file folder for bank statements on your computer. Each month, download the file from your banks website and save in this folder. You can set up the folder as a password protected file if you have other people using your computer. At the end of the year, burn all the monthly statements onto a CD and store with your income taxes for that year. Most banks only hold 18 months of statements, some only 12 months on their server. The IRS requires you to hold 7 years of bank statements in case of audit. Once the CD is created, you can then delete the files from your computer and create a new folder for the new year.

I hope you find these tips helpful and soon will not feel so overwhelmed at the beginning of the new year trying to get all your files in order for tax preparation.

Can The Association Deny You Access To The Association’s Financial Records?


You receive information that association board members and representatives of the community management firm are having lavish dinners at some of the most expensive restaurants in Orange County, all at association expense. You request the association to provide you with records in order to substantiate the information that you received. The association declines to provide you with the records. Can the association be forced to provide you with these records?

Legal Analysis.

This issue is governed by Civil Code section 1365.2.

The short answer is “yes.” The association must produce to the owner, on the request of the owner, all financial records, which would include records relating to association restaurant expenses. The scope of records that a member is entitled to receive is very broad. It includes contracts with vendors, state and federal tax returns, reserve account balances, agendas, minutes of meetings of the board of directors, members and any committees, excluding executive session meetings, and membership lists. As to membership lists, the owner must state the purpose of the request which must be reasonably related to the requestor’s interest as a member. A member may opt out of the list so that that member’s name is not disclosed. A member is also entitled to look at the check register of the association.

The records must be made available for inspection at the business office of the association. The records also must be available for copying. The member may be charged a reasonable fee for the copying costs. However, the member cannot be charged an inspection fee, except that the association may charge $10 per hour, but not to exceed $200, for the time spent in redacting enhanced association records. This means that if certain association records have to be redacted, there can be a statutory charge for this service. The issue of whether any such information is entitled to be redacted is addressed in the statute. The statute says that the association may redact information where it is likely to lead to identity theft or fraud or where the information is privileged under law, such as attorney-client information, or where it would constitute an invasion of privacy of the members, or constitutes a record of disciplinary action against a member or discloses personal identifying information or discloses personnel records other than payroll records. Further, interior architectural plans for member’s homes may not be disclosed.

The association must produce information regarding compensation to its employees and vendors. Further, if the association is redacting or withholding documents, the association must explain the legal basis for this action. The association records may not be sold or used for commercial purposes not reasonably related to a member’s interest.

In the event of litigation between the association and a member regarding access to records, the prevailing party may recover reasonable attorney’s fees. In addition, the member may recover a penalty of $500 for each separate denial of records which was unjustified. In an action by a member against the association in which the association prevails, the association may recover its costs only if the court finds the member’s action to be “frivolous, unreasonable or without foundation.”

Electronically stored information may be compelled to be produced. The records to be produced include the current year and two previous years.

There is a time period for the association to produce the records. The records from the current year must be produced within 10 business days. The records from the two previous years must be produced within 30 calendar days.

The association does not have any liability for failure to retain records prior to January 1, 2006. If the association does have records prior to January 1, 2006, the statute is unclear as to whether these records have to be produced.

Which Financial Records to Keep and How Long?

Keeping good financial records is a good practice for moving on in your financial life. If you don’t have the discipline to file away crucial bills and toss useless ones, how will you have the discipline for the more demanding task of saving large amounts of your money. Here are the ones to keep and store in a fireproof cabinet or in a safe-deposit box:

1. Real estate documents: Keep the title of your house, the deed of purchase, your mortgage contract, your sale contract, receipts for capital improvements or property repairs you have made. You will need them to minimize the taxes you might owe someday after selling your home for a profit. You can keep these records permanently.

2. Receipts or records of all personal property you own. If you don’t have any record, you can use your camera to take photo or make a video of these items, along with written estimates of their value. If the house burns down or is burglarized, your insurance will be far more willing to accept your claim.

3. Tax returns and all related documents. It is good idea to keeps all your tax returns because the IRS can go far back to 6 years to audit your tax return.

4. Insurance policies. You can keep these items until they are expired.

5. Legal documents. You will need to keep copies indefinitely of your will and power of attorney. Have the lawyer keep the originals and be sure to get rid of old wills.

6. Credit card statements. You can keep these for a year. That way, if a charge erroneously appears on your bill more than once, you will be able to prove that you already paid it.

7. Bank statements and canceled checks. These records help you keep track of where your money goes, Also, they are very helpful when you make a budget. Keep these statements and checks for 3 years, indefinitely for home improvement.

8. Investment records. Save your monthly statements from your mutual fund companies and brokerage firm. These statements will provide you the information to compute the taxes when you sell it. After you get your annual summary statements, you can toss the monthly statements. Save all trade confirmations and dividend reinvestment statements. Keep your annual statements permanently.

9. IRA/Retirement accounts. Keep all annual statements indefinitely.

10. Loans. Keep the statements that say you paid off.

11. Miscellaneous. Keep car title, birth and marriage certificate, and passport.