Paperless Office. Have any suggestions?

[Hamacher]

Anyone gone paperless? What is involved? We currently use CCH Prosystem FX for our tax prep. I think they offer a filing cabinet program but wasn't sure if I should use theirs or if there is a "generic" program that would be better. I assume I will need to buy a scanner. Any recommendations? What documentation do you still keep in paper form, if any? What do you do regarding backups? That is my biggest fear that we will have some computer problems and lose everything. Should I scan my current tax files and destroy the paper copies? Do you maintain all of your clients info. (i.e. source documents, Excel documents, Word documents, and tax returns) in the same file?

Any advice would be appreciated.

[Holland]

My own experience

For what it's worth: We have been almost paperless for the past three years. We did scan all client docs back to 1975. I found the space saved paid for the conversion in one year. One skilled clerk can scan about 1 file drawer a day. A client's paper is scanned and returned with a CD which contains a copy of the returns. We use a all-in-one machine at each workstation as we found that method far faster and more convenient.
Backups: I am somewhat paranoid. Our network uses a Linux firewall as I do not trust anything Micro$oft. The server hard drive is cloned and encrypted. The encryption keys are kept off-site in safety deposit boxes (inconvenient when you have to reboot the server). Daily backups are also stored off-site in safes. In theory, if a thief were to come in the night, they would find paper client docs that are being worked on, some client copies that have not been picked up, and an unusable server.

[George Boutwell]

We once had a paperless office

Our neighboor next door came over and told us that we had a client in the rest room in back, pounding on the wall and yelling about how we were paperless.

[OldJack]

Not for me.

Since I have not given serious consideration to going paperless my opinion is probably not what you are looking for.

However, my opinion is that it will cost you more in the long run and benefit you little. A proper filing system and destruction system with paper documents is low cost and hard to beat.

Yes, I have clients that have been with me for 40 years and I have retained 40 years of paper documents for those clients. Yes, I have occasionally made use of those old documents. Previous client files have been properly destroyed leaving space for new client documents. I also backup and convert tax returns to pdf format and for computer recovery and convenience.

I consider a complete paperless office as a high risk operation. Client lawsuits go well past the statute of limitations for tax return audits.

[Roberts]

OldJack I think you've missed some of the benefits. Being paperless means having multiple backups of all documents so your liability could be considerably less. If you are paperless you never need to destroy old documents - a single DVD can hold thousands of documents so destroying old data just isn't necessary.

Cost? What amount of time and money is invested in all those filing cabinets, shuffling papers, making copies and time spent coordinating all of it? When I sit down to work on a clients return it does take me a few extra minutes to scan them than it does coping them but when you figure time to file and maybe one trip to the file folder later to make a copy of something - time isn't an issue. When I started out we were paying for over 1,000 square feet of storage space for all our files. At $12+ a square foot - cost was very quickly thrown out the window after a few years.

Business planning? When I started out our ex-CEO told me a briefcase is basically a career killer waiting to happen. You've got your appointment book and your client list with all your notes and phone numbers in there. Eventually during a career, 50% chance someone steals it out of your car, you lose it or it is somehow destroyed. I looked at our 40+ filing cabinets filled with musty old forms and yellowed documents and wondered - is that a career killer waiting to happen with one spark?

Ease of use - when I go to a clients office I absolutely love the knowledge and power of knowing I've got every form they have ever given me sitting in my laptop to print off or view. I don't just have all of our current work papers but for every year we have ever worked together and all the volumes of research material sitting there with me. IRS forms and publications at my fingertips.

About 4 years ago we had a fire threat in our building and everyone was kicked out for a full day. Standing there with everyone else looking at the building helpless I realized our entire firm was shut down and could be gone completely within a few minutes. Without an electronic backup of everything you do - it is only a matter of time before that happens to a few people on this board.

[sea-tax]

I think the benefits really become apparent depending on the size of your practice. Also if you include payroll check-writing and bookkeeping as some of your services.

We have been paperless for almost two years and I personally can't see why it took so long for us to change over. The time it takes for me to simply click on my DMS system and click on the client name and there and behold is everything I need. No longer going to our file room and sorting through over two thousand files. Also if a client calls and needs an extra copy of something I can simply attach it to a password protected PDf file and email it to him with in a minute. Otherwise I would have to print or photocopy the doc then make up a fax transmittal sheet then walk to the fax machine and hit send.

As to the posters first question I am not familiar with your program but we use Lacerte and there Document Management System. It works wonderfully.
As for what we keep ? Just about everything but the kitchen sink. We can print a DMS copy of the return right into the DMS program therefore no scanning needed then I have an assistant who manually scans in all the source docs. IF later in the year I am writing a letter in regard to an IRS notice or some mortgage letter I scan it into there as well.
As for backups we do them daily and keep the back ups off-site in a safe.

[OldJack]

>>OldJack I think you've missed some of the benefits.<<

I also have the DVDs (and backups) and think they are great as you say. But sometimes the DVDs go bad and it is nice to have those paper returns that only go a little yellow. With a proper paper destruction (or storage) program you should only need a limited amount of currently used file cabinets considering the size of your practice. You can't just put documents in a file drawer and forget about them unless you want a large number of file cabinets taking up needed office space.

You are kidding yourself to completely rely on electronics for documents considering the yearly changes in media and technology. A few years from now those DVDs must be upgraded to current media formats or they will be unreadable. And how much time will you spend each year upgrading those old files to new media when you may never need to refer to them. ie: How many computers today have a 5¼" floppy drive that I backed up on in the 1980's?

edit: Also it is nice to keep working when the electric goes out.

[taxmandan]

Paperless office

Anyone gone paperless? What is involved? We currently use CCH Prosystem FX for our tax prep. I think they offer a filing cabinet program but wasn't sure if I should use theirs or if there is a "generic" program that would be better. I assume I will need to buy a scanner. Any recommendations? What documentation do you still keep in paper form, if any? What do you do regarding backups? That is my biggest fear that we will have some computer problems and lose everything. Should I scan my current tax files and destroy the paper copies? Do you maintain all of your clients info. (i.e. source documents, Excel documents, Word documents, and tax returns) in the same file?

Any advice would be appreciated.

We've been paperless for three years now and it works fine. Back up, BACK UP, and be sure you BACK UP!! We don't use the data file cabinet that comes with our tax software because it was too cumbersome, used the SSN for the file names and had no way to encrypt the files and no password protection for access.

We scan all client papers into .pdf format and store in the clients folder by year. We return all papers to the client. We keep paper copies of forms that the client signs such as the 8879, 8853, etc. otherwise everything is in the computer.

[jainen]

clay tablets

>>As for what we keep ? Just about everything but the kitchen sink.<

The problem is not putting something INTO the file. It's getting it out.

Oh yes, it is easy to keep everything. That was basically the same promise made for Xerox copiers, and no doubt for papyrus rolls and even clay tablets.

[MAMalody]

I found this on the ATX Community board. Good article, I thought.

http://webcpa.com/article.cfm?articleid=24349&page=1

Mike

[Bees Knees]

I’ve gone part way paperless.

I keep a hard copy of the tax return for three years, then it gets shredded. That allows me to have a hard copy of the return the next year when interviewing the client.

All W-2’s, 1099’s, K-1’s, notes, and other documents get scanned as JPEG files (I can scan them as fast as I can make photocopies). I save the files in separate folders per client, per year. Easy to keep. Easy to backup on multiple hard drives and multiple computers. It also gets backed up automatically every night over the internet to an offsite location, in case of fire or theft.

Each tax return is also saved as a PDF for multiple hard drive multiple computer backups.

I do not use a file cabinet program, as I know how to create my own filing system where I can retrieve data as fast as OldJack can pull a paper document out of his filing cabinet.

Since going to this system, I have cut down on paper consumption over 50%, saved on laser printer toner, and reduced the time it takes to shred old tax documents. None of these new procedures have increased the time it takes for me to service a client.

[Maria]

I Support Paperless

Hi,

I am here to say one more thing-about the environment, trees, wastes that we have to deal with. It will be less trees and more wastes with time. Maybe we can be a little bit environmental friendly by going paperless.

My company has been thinking about paperless for a few years but the senior staff is strongly against it. She likes paper, and she has at least 4 pages of checklist to do for every return, those checklist are either green or yellow color and they are legal size, it is hard to scan legal size.

The other reason she doesn't like paperless is, you have to copy original documents anyway, since she needs to make notes on those copy of original documents.

I think paperless is not only more environment friendly, but more efficient in the long run. I, myself is running paperless on all my bills, I gets my bill from email and all bills are paid electonically. I save all those to a pendrive.

Thanks.

[Holland]

Scanning

Hi,

She likes paper, and she has at least 4 pages of checklist to do for every return, those checklist are either green or yellow color and they are legal size, it is hard to scan legal size.

Why is it hard to scan legal size? We do it on a daily basis and we have not noticed any difficulty.

[OldJack]

I’ve gone part way paperless......
....
I do not use a file cabinet program, as I know how to create my own filing system where I can retrieve data as fast as OldJack can pull a paper document out of his filing cabinet.

And you can retrieve that data as fast as OldJack when the electric power is off. Power failure is usually during the winter and tax season, especially in Minnesota Bee country.

Trees were mentioned as a reason to go paperless. Since the number of farmers have decreased over the last 50+ years, farm land in this country has gone to trees. There are more trees in this world today than there probably has ever been. Saving trees is a noble idea but to go paperless to "save" the trees is just plain uninformed. Besides, most trees used for paper are grown for that purpose just like beef cows are grown for MickyDees and you. So who is going vegetarian?

[Holland]

You prepare taxes without any electicity??

And you can retrieve that data as fast as OldJack when the electric power is off.

Gee, I really AM impressed. You don't go paperless because the power may go off? But when the power is off you still keep working, frequently pulling files from drawers to work on them? I am pretty well paperless and it takes me about 10 minutes to roll the generator out of the back room to the sidewalk and crank the network back up.