Accounting documents are kept for 10 years, on paper or in electronic form. That's the rule—short to say and easy to forget. The hard part isn't knowing it, but making it a habit. A well-organized file year after year is the cheapest insurance your business has.
Atul Gawande, in The Checklist Manifesto, shows that even the best surgeons make mistakes when they rely on memory, and stop making mistakes when they use a simple checklist. The same applies to your business file. Not memory, a list.
The minimal one-year file contains these five groups.
1. Invoices. All sales and purchase invoices, now mostly electronic in the fiscalization system, together with internal documents such as waybills and delivery notes.
2. Bank. Pull the complete bank account statements for the entire year, not just the months with large transactions.
3. Contracts. Leases, suppliers, clients, loans, any agreement with financial value.
4. Payroll records. Payroll and contribution documents for each month, along with employment contracts.
5. Financial statements. The annual financial statements, the assembly's resolution approving them, the certificate of deposit with the QKB, and the profit tax return.
At the end of each year, close the file, label it with the year, and move it to the shelf or to the electronic archive. After ten years, the oldest file is no longer required. The electronic format is valid just like paper, provided that the files are readable and retrievable.
A spare parts store in Fier is being audited by the tax authorities for 2022. The audit is requesting that year's purchase invoices. An import invoice for 400,000 LEK cannot be found; the 2022 file is incomplete.
Without supporting documentation, the expenditure of 400,000 LEK risks not being recognized. The year's taxable profit increases by 400,000 LEK, and additional tax is calculated on this amount at the applicable rate, together with late‐payment interest. You can find the rates at Tax legislation. The real cost of a lost sheet of paper is measured in tens of thousands of lek. The cost of a well-maintained file is one hour of work per month.
At the Resource Center you'll find the annual folder checklist, a single sheet with the five groups above broken down point by point. You print it, stick it on the folder cover, and mark it off throughout the year. You'll find it at the Resource Center. Resource Center.
The 10-year retention obligation stems from Law No. 25/2018. It is worth checking in parallel the retention period for tax documentation under the tax procedure legislation, because in practice the longer of the two periods applies. A key point for colleagues is the handling of electronic fiscal documents. The electronic invoice resides in the central system, but the unit remains responsible for accessing and ensuring the completeness of the archive, so periodic exports and local backups should be part of the monthly closing procedure.
The system is a good source, but don't rely on it alone. Perform periodic exports and keep your own copies, because your business is responsible for complete documentation. And don't forget that bank records, contracts, and payroll lists aren't in there.
No. The obligation to retain records continues even after the business is closed, for the remaining period. Audits and legal requests may arise even for years that have been closed.
If you want your archive to be built and systematically maintained by an external economist, check out our packages at offer or write to us at Contact page.
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