Sorting your financial papers
By Diana McLaren • Bankrate.com

Ilse Lichtenberger, of Toronto, readily admits she's the perfect candidate for a professional organizer to help her cope with the ever-mounting piles of paper in her life.

"I've kept everything," she says. "All my daughters' report cards, article clippings I thought I might use in my classes when I was teaching."

The problem is, Lichtenberger is now retired from teaching and her daughters are grown women. And still the paper piles grow as she operates her new business -- a combination international craft store and arts centre.

"I don't even know where I'd start," she says about dealing with the 40 years of accumulation.

Sentimental artifacts aside, it's the financial papers in our lives we need to worry about and figure out what to keep, for how long and what to let go.

Taxing documents
"Essentially, you need to keep all your tax-related papers for six full years, so I advise clients to keep them for seven," says Margarita Ibbott, a professional organizer in London, Ont. "That includes source documents (actual receipts as opposed to any books you keep). I also advise clients to keep any e-mails or correspondence concerning any tax-related financial matters."

Anything you claim as income or expense -- such as child care, medical or dental treatment or education or training of some sort -- requires original supporting documents.

Ibbott says she attended an excellent seminar for small business owners conducted by the Canada Revenue Agency, or CRA, that helped her learn which documents she needed to keep. And while not everyone runs a small business, many people today combine home and home-based occupations so they have two streams of paperwork. The CRA website has a document you can download and use that answers in detail how long should you keep your income tax records.

Ibbott notes one point in particular with regard to electronic records.

"When original source documents and records are in an electronic format, they must be kept in an electronically readable format," it reads.

And when the tax agency states that electronic records must be in a readable format, that means it "can be processed and analyzed with CRA software." So be sure to keep your files in a generally recognized format.

Organization is key
Carol Rowntree, of Toronto, works with corporate and individual clients in a consulting role, setting up administrative systems and sorting what is often "a real mess" of financial papers into some semblance of order.

"The whole thing is having some control over it. It doesn't matter how you keep your paper, what's important is that important papers are easily retrievable," she says.

Rowntree is a fan of keeping paper copies even if you have electronic versions.

"Just think how obsolete technology becomes," she says or what might happen if your computer crashes.