Every business is required to maintain relevant and secure records. Details pertaining to your normal business transactions have to be kept for five years to comply with tax regulations. Records relating to the initial setting up of your business and its expansion, which could be used to determine future capital gains or losses, must be kept indefinitely.
You should already have systems in place to record and store this information. However, introducing electronic technology into your business raises certain issues in regards to record keeping.
Determining what is a record
How to store these records
Maintaining the authenticity of your records
How to provide access to them.
Determining what is a record
In business, a record is the data or information created or used for administrative, legal, audit or other operational purposes.
In most businesses today these can be in paper and/or electronic format. All such information is part of your business records and you are legally required to maintain them in order to provide a clear audit trail.
Electronic records include any data or information created in a format that only a machine can interpret.
This includes information, orders, requests and so on, received through your Web site; pertinent information gathered from the Internet; and e-mail relating to your business.
How to store electronic records
You have various options for storing electronic records. Depending on the nature of your business, and how often you refer to them, you can either print them out (make hard copies) or keep them electronically.
Hard copies can be stored conventionally with all your other records.
Electronic records need to be stored in some type of electronic format. This can range from setting up relevant systems and folders on your computer, storing them on floppy disk, copying them onto CDs or holding them in dedicated electronic data storage facilities.
This is a popular option at the moment, with many businesses leaning towards paperless offices.
In all cases, you will have to ensure that you maintain the integrity of your records. All electronic records will need to be held in a format that cannot be accidentally altered in any way. This means that you must ensure that they cannot be overwritten or changed.
They will need to be kept as “locked” or “read only” files.
Consideration must also be given to how long these records need to be kept. This is important because technology changes rapidly and technology in common use now could be obsolete in 10 years time.
Ten years ago, for example, the five-and-a-quarter inch floppy disk was still considered leading-edge technology. Now you would be hard pressed to find a computer capable of reading the information stored on that disk.
Records kept for tax purposes only need to be kept for five years and technology should not have developed to such an extent as to prevent you accessing this information if required.
However, information kept indefinitely should be held in a format that can be read at any stage in the future. It is prudent to hold this information in a paper format.