Sunday, June 03
Awhile back, a member posted an inquiry about if and how we are going paperless, and what tools we use.
I thought I'd post my 10 cents here.
Much of the discussion was peppered with concern about keeping receipts for the IRS, in the event of an audit or something. I will preface by stating I am not a CPA or attorney--only licensed to drive a car. But I am married to a business accountant who really knows his stuff, and we have a great CPA--both of whom back me up on this. BUT--do your own research.
If the IRS is your biggest concern, go to the source. There is a very helpful bulletin posted by the IRS which I think you may find helpful: [/url]http://www.irs.gov/pub/irs-irbs/irb97-13.pdf[url]
Basically, you can keep everything in electronic format pretty much the same way you'd keep it in hardcopy. It must be recorded somewhere, retrievable, printable, readable, tested/proved, etc.--just like your originals.
That being said, I have not put anything in a paper file in about a year. The only exception is when I have an original document with my original signature on it that pertains to the title of a property or financing. Those get scanned, stored, and the original put into in a safe.
ALL OTHER DOCUMENTS are scanned and shredded with delight.
As for my system, it's pretty simple.
Debit and credit card receipts I post to my accounting software, then I keep them in an accordion file designed for checks (OK, so I guess this is exception #2). At the end of the year, I scan them all, sorting them according to month. The only reason I keep these types of receipts for a year is because stores often require the original for returns. The IRS does not need originals.
Tenant applications are often sent to me electronically (email, e-fax, etc.), in the first place, so I don't see why I should need to have the actual original. For the same reason, I do not feel compelled to redact the SS#s or account #s or anything before electronically recording the documents. I do print out the application to work on it--scribbling my notes and such. Afterward, I record my notations and shred it.
I keep a folder for each year, labeled "Bills 2012," for example. In that folder, I have individual PDF files for each vendor. For example, my water bills for the entire year are kept in one file under that vendor's name. Each time I get a bill, I scan it, attaching it to that PDF file. Then I shred it.
I do file bills for specific properties under the folder for that property. This helps me to prove renovation/repair expenses and valuations down the road.
Tax-related documents, such as property tax bills, are kept under a folder labeled, "Tax 2012." W2s, 1099s (in & out), tax receipts, donations, etc.--each of these types of bills/receipts/docs get their own file under the Tax 2012 folder.
As for equipment, I use a basic HP 6500 all-in-one printer/scanner/fax. For me, it is critical to have a document feeder, in addition to the scanner bed--it's much easier, especially for multi-page documents.
I also invested in an Adobe upgrade. I have Adobe Acrobat X Standard, which allows you to append an existing PDF via the scanner. You can also load multiple-one page documents into the feeder and tell Adobe to treat them as individual PDFs. Big time saver. Also, if you set your settings right, you can tell Adobe to make your PDF files searchable. That way, you can search all your documents for some keyword and find the particular receipt or bill, in case you forgot how you filed it.
When on the go, I use an iPhone app called "Scan Pages." It's very very easy to use and makes a high-quality image of whatever you want.
As for protection of my media, I have a stand-alone external harddrive, which I have set to back-up automatically every day. In addition, I subscribe to Carbonite, an on-line back-up system. You do have to pay for this fee, but I think it is worth it. I test these systems weekly, but searching for specific files I know where saved during this week. Thankfully, I've always found them, both on Carbonite and on my external harddrive. Unfortunately, I've also crashed before and had to do a full restoration--both from carbonite and the harddrive--each time, they saved my butt.
Since I'm such a control freak, I'm not ready for "the cloud" yet, but I'm sure I'll be dragged kicking and screaming in that direction at some point. I guess the Carbonite back-up system is a form of use of the cloud, so . . .
As an aside, here's a word to the wise: if you use MS Outlook, the .PST file for Outlook cannot be backed-up if you have it open. I learned this the hard way and lost some precious contacts. I have the habit of leaving Outlook open 24/7. After my last crash, I learned to close it every night, and let the back-up systems record the current version of the .PST file.
I think the key here is to decide what your system is going to be before you begin, and stick with it. Consistency is my best friend.
I have a personal rule that, whenever there is some piece of paper in my hand, I deal with that task to the end. For example, if it's a bill, I pay it, post it to my accounting system, scan it and shred it immediately. I do not want to handle the same piece of paper over and over again. Deal with it and get rid of it.
I'd love some feedback from others with experience in a paperless office. What's worked? What's not worked? Have you been audited and gotten in trouble because of a flaw in your paperless sytem? What are your fears moving forward?