Document Archiving - Safely and Compliantly Store Documents

1. What does document archiving mean?
2. These documents must be archived
3. Why is document archiving important?
4. How does document archiving work?
5. What requirements are there for GoBD-compliant archiving?
6. What does audit-proof archiving mean?
7. Is digital archiving legally regulated?
8. Which software is suitable for document archiving?

Contracts, HR documents, receipts - without them, businesses cannot function. Therefore, companies need to find a way to store their documents safely and in compliance with legal requirements. Otherwise, they face legal disputes and the loss of important data. But what characterizes reliable document archiving? What legal principles must be met? And what tools are used? You can find the answers to all these questions in our article.

What does document archiving mean?

Document archiving involves the long-term storage of inactive documents. These are static documents - documents that cannot be changed and do not find regular use. Only inactive documents are suitable for archiving. Dynamic documents that are actively used in a company's daily business are not suitable for archiving.

Example: You negotiate a contract with a supplier and send several drafts back and forth - then it is a dynamic document. However, once the contract has been signed, it is a permanent, static document. These documents are then stored until they need to be retrieved in the future.

Archiving inactive documents is often necessary for legal reasons, to comply with regulations, or in case they are needed for an audit. Archived documents should therefore always be easily findable, even if they are not regularly used.

You can archive documents both physically and digitally. However, most companies now prefer digital document archiving of their physical documents. The advantage is that it is easier and cheaper to store digital documents in the long term. However, there are also companies that use hybrid archives, which contain both physical and digital documents.

These documents must be archived

As a entrepreneur, you must comply with the GoBD (Principles of Proper Accounting and Documentation) guidelines. These apply to companies of all kinds and sizes, and freelancers must also deal with the requirements. The legislator stipulates that tax-relevant documents must be archived in accordance with GoBD. These documents include the following types in particular:

• Financial Statements: Annual financial statements and the opening balance sheet
• Booking receipts from incoming and outgoing invoices
• Ledger, main and sub-ledgers
• Business and trading letters
• Stock reports
• Inventories
• Documents that fall under Article 15, Section 1 and Article 163 of the Customs Code
• Other tax-relevant documents, such as HR documents

As a general rule, the documents required to be archived must be kept for ten years. Contrastingly, bills of lading, delivery notes, offers with order sequence and payroll lists for special, intermediate and final payments. These documents only need to be kept for six years.

Why is document archiving important?

A conventional document archiving is not only legally relevant, but also offers the following advantages:

Documents are constantly available

Especially with electronic document archiving, you have all your documents in one central place and can access them regardless of time and location. This allows for quick retrieval of needed documents even after several years.

The documents are stored safely

Documents are a core element of all significant business processes. Therefore, they need to be protected against theft and loss. If they are damaged, for example, by a fire or unprofessional storage, this can paralyze entire processes in finance or sales. By digitally archiving your documents and contracts, they are protected from such incidents.

Avoidance of legal disputes

By archiving your documents in a legally secure manner, you avoid legal disputes due to legal violations. To do this, you store your documents on certified storage systems. In this way, your receipts are stored permanently and stably, taking into account retention periods.

Time and cost gain

By digitally archiving your documents, you reduce your storage costs and provide shorter research and processing times. After all, digital archiving of documents is the basic element of automated work processes.

How does document archiving work?

The archiving of documents is a multi-tiered process, with the introduction of a document management system as a prerequisite. Additionally, document archiving requires constant attention to keep an archive up-to-date and secure.

1. Determine your needThe first step in archiving documents is to determine the reasons for its necessity. You should also determine what you want to achieve with auditing and how often and by whom the audited documents need to be reviewed.
2. Sort out unnecessary documentsNot every document you own needs to be stored long-term. Simply stick to the aforementioned types of documents which need to be archived for legal and audit-related reasons. At the same time, you should securely shred unneeded documents. After all, you don't want to waste time and storage space for archiving documents you will never need.
3. Create a retention scheduleAs already mentioned, different retention periods apply to individual types of documents. Therefore, create a retention plan that clearly shows how long certain documents must be stored and whether, or when, they can be deleted.
4. Choose a suitable storage locationNow the matter to clarify is where your documents should be archived. Physical archives can be set up on site, in a secure warehouse or with a professional archiving service. However, as previously mentioned, we recommend digital document archiving. Digital documents can be stored either on your own servers or externally in a cloud. The cloud variant is particularly popular because it allows access from any location. In addition, there is no need for regular maintenance and managing by your IT department.
5. Import and process the documentsWhen setting up a digital document archive, the existing physical documents are converted and processed into an electronic format. For this, you need to scan the documents (in PDF format) and then convert the scanned files into indexable text using OCR technology (Optical Character Recognition).
6. Transfer the documents to the archiveAfter you have scanned and prepared the physical documents, you can send them together with the existing digital documents to the document archive. If you are using a separate analog archive, then your physical documents go there.

What requirements are there for GoBD-compliant archiving?

Properness

• clear sorting by date, sender, recipient and business area
• regulations, data structures and processes are defined in advance via a document management system

Traceabillity

• traceable storage of documents (for example, distinction between cash receipts and cashless transactions)
• no booking without receipt

Completeness

• all data must be archived completely
• each business transaction must be assigned a receipt with certain information
• Example invoice: date, receipt number, sender, recipient, quantity and total amount must be included

Correctness

• business processes must be documented truthfully
• details must correspond to the actual circumstances
• all necessary data for the account assignment must be available

Promptness

• there should not be more than ten days between document receipt and booking and archiving
• for cash registers and cash receipts, a daily booking deadline applies

Documentation

• requires process documentation - contents, processes and end results from the data processing system are recorded there
• tax-relevant documents must be stored in an indexed archive system
• Immutability and readability must also be ensured for digitally archived documents
• the used hardware and software must be secured against attacks
• modifying data requires documentation
• Paper documents can only be destroyed after their digitization if no legal reasons oppose
• Document archiving cannot simply be secured as a PDF in the cloud or on a data carrier
• Use of professional archiving software is required
• digitally captured documents as well as commercial and business letters must be kept in the original format

What does audit-proof archiving mean?

Audit-proof archiving is considered legal compliance storage of documents. That is, the archiving must comply with legal regulations regarding completeness, correctness, availability, immutability, traceability, and security. It is important here that the audit-proof archiving considers the entire document filing process and does not focus solely on the technical aspects. Therefore, the process reference also determines whether a document archiving system is considered audit-proof.

Is digital archiving legally regulated?

The new version of the GoBD also contains the legal guidelines for digital document archiving. Regulations there include the correctness and completeness as well as traceability and immutability of digital documents supplemented by the Act to Protect Trade Secrets (GeschGehG) and the Basic Data Protection Regulation (DSGVO).

Which software is suitable for document archiving?

As mentioned earlier, most companies decide to archive their documents digitally. They use document archiving software to store relevant documents in a central, secure location. Below is an overview of the best programs for document archiving:

Microsoft OneDrive for Business

DocuWare

heyData

Caya

Dropbox Business

Filestage

enaio® by OPTIMAL SYSTEMS

Adobe Document Cloud

Sawayo by Infoniqa

empower

On OMR Reviews, you will find a detailed comparison of the mentioned tools as well as numerous other Document Management Software and providers.