How Long to Keep Invoices?
Why Keep Invoices?
Evidence in Case of Disputes : Invoices serve as evidence in case of disputes with a customer or supplier. They justify the provision of a service, delivery of a product, or the amount owed.
Tracking Transactions : Invoices allow for tracking the history of business transactions, analyzing business performance, and making financial forecasts. Cash registers are a key tool for recording and monitoring these transactions.
Tax and Accounting Obligations : Keeping invoices is a legal requirement for most businesses in many countries because they serve as evidence of commercial transactions and validate the income and expenses reported to tax authorities. They also help ensure the compliance of accounting entries.
What Is the Retention Period for Invoices?
The retention periods for invoices depend on the legislation of each country. In France, for example, sales and purchase invoices, as well as those related to assets, must be kept for ten years from the closing of the relevant fiscal year. In Morocco, these same types of invoices must also be retained for ten years, but from the date of the invoice issuance. It's crucial for businesses to research the specific retention periods in their country and adhere to these legal requirements to avoid issues during tax audits and to have evidence in case of disputes with customers or suppliers.
In What Format Should Invoices Be Retained?
Paper Format : Paper invoices should be kept in a secure and well-organized location. It is advisable to sort them chronologically or thematically to facilitate easy reference.
Digital Format : Scanning invoices can save space and make them easier to search. Digitized invoices have the same legal value as paper invoices, provided they comply with tax authority requirements (integrity, readability, and accessibility). It is crucial to regularly back up your scanned invoices to an external storage and keep a copy in a secure place.
What Tools Can Be Used to Retain Invoices?
Binders and Folders: Binders and folders are simple and effective tools for organizing and retaining paper invoices. They enable the grouping of invoices by theme or period and protect them from damage (such as humidity or tearing).
Invoice Management Software : Invoice management software facilitates invoice creation, sending, tracking, scanning, and archiving. It also offers reporting and analysis features to optimize financial management. Several solutions are available in the market, suitable for the needs of small businesses (e.g., QuickBooks, FreshBooks, Zoho Invoice). Some software can even be integrated with cash registers to simplify transaction and invoice management.
Cloud Storage Services : Online storage services like Google Drive, Dropbox, or Microsoft OneDrive allow you to keep and access your scanned invoices from any internet-connected device. These services offer sharing, search, and automated backup features, but it's essential to verify their compliance with legal requirements for invoice retention.
Electronic Document Management Systems (EDMS) : Electronic document management systems centralize and organize all of the company's documents, including scanned invoices. They facilitate document search, access, and backup and can be integrated with other management software (e.g., accounting, CRM) to improve operational efficiency.
Invoice retention is a crucial issue for small businesses. It is essential to comply with legal retention periods, select the appropriate format, and use suitable tools to simplify invoice management and archiving. By following the advice in this article, you can optimize your invoice management, avoid issues during tax audits, and focus on growing your business.
