Ask the Expert: Paperless Office

Tom: So how long do you think you’ve been in practice in tax and accounting?

Sue: I started my practice in 1980, so 39 years, but I started very young.

Tom: If you think back to 1980 and the volume of paper that you had in the office and I’ve often heard you mention that your office is paperless and that sounds amazing in a world of tax preparation where so much paper involved. Can you describe what it means to be paperless and how you managed to get your practice to that point?

Sue: I can remember buying the practice and a part of the equipment that we purchased were calculators and desks and file cabinets and file cabinets and more file cabinets. And then three years into my practice, we moved my office and the biggest expense was moving file cabinet after file cabinet and so in 2005 we made the leap at that time to go to a paperless office, and it was a work in progress. I would say it probably took us two to three years to be fully implemented paperless. But now we retain no paper copies of anything for anyone. All original documents coming into our office, go back to our client, we retain no paper. We may temporarily retain it until we’re finished, but when we complete a return, complete financial statement, complete a bank rec, they either are returned to the client, or they’re shredded. We retain no paper. It has improved the efficiency of our office many times over. No longer do I pay someone to go file something in a file folder. No longer do I pay someone to go pull a file folder out of the file, so I can prepare their tax return. No longer do I pay someone to go re-file that same file folder that I paid them to pull it out of in the beginning.

Now, it is all done at the preparers desk. Everything is filed away. There are many ways to do paperless office. Just because I chose one way doesn’t mean it’s the only way…there are many ways. There are document management software out there that you can purchase that make it very, very easy to make that transition from paper to paperless. The rewards you get from it are phenomenal. In today’s world of technology where you can access over the internet, your server, you can access your computer, you can store millions of megabytes of data on little jump drives, or on a notebook computer. You have all that access at your fingertips, no longer file cabinets. It’s just… I have no number to tell you about how much it is saved. I just know, efficiency-wise, we do a couple of thousand tax returns through our office with three preparers. We have about 120 accounting clients that we do financials for, bank recs for, all done, we don’t have a file cabinet in our office. And we have two people who take care of sales tax payroll tax and accounting. The efficiency is just phenomenal.

Tom: What was actually the physical process of going paperless with those records that were in file cabinets and file cabinets. Was it something that you ended up shredding or did you scan that documentation? If someone else is looking at going paperless, and they’ve got that room full of file cabinets, what would you suggest they do?

Sue: Probably in today’s day and age…’cause back in 2005, that was 14 years ago, the shredding services were not available then. It was expensive to hire someone to come in to do that. I live in a small town, as far as I know, at that time, we didn’t have that service that we could take them somewhere. We actually ended up burning ours, that’s how we destroyed them. But in today’s world, I would say you can hire a shredding service for very small amounts of money. And, they shred them on-site. They give you a certificate that they have been shredded and I would suggest that you hire a shredding service. And then you make the decision… they can come in and probably take it out of your file drawers probably if you wanted them to. Most of them will give you a bin and you have to physically dump them into the bin to rid yourself of them. But that would be the first start. You certainly have the choice of taking all those documents before you shred them and scanning them in.

If you want really want to keep 20 years worth of documents, that’s certainly your choice but it will be a time-consuming process if you want to scan those in before you shred them.

We actually took the position… we kept the paper for three years past that. So 2008 is when we actually started destroying records. Up until that time, we just started in ’05 scanning in paperless. After 2008, then we went and destroyed the old paper copies.

Tom: And do you have the same process when you get rid of, let’s say, old computers or copiers, where there may be data stored on those?

Sue: That is a big issue that we forget about. We update our computers on a regular basis. Most of our computers are less than three years old. Typically every two to three years, we update everyone’s computer in our office. We update our printers on a regular basis as well, and the item that we forget about is there’s a lot of data sitting on those computers. Now, our server has the most data. But, again, the shredding service we use will take our computers and destroy them for us. We have to schedule an appointment and they bring the equipment necessary to our office and they actually shred or destroy that.

Another way is a good old hammer. I mean, get that hard drive destroyed so that any data would not be usable. That would be my biggest fear: someone would get a hold of an old computer and be able to glean someone’s data from that.

Tom: With all your experience, what do you think is the biggest challenge facing a tax practitioner today?

Sue: The biggest challenge facing tax practitioners I believe, are keeping us connected with our clients. In our technology age today, it is very easy to hide behind the telephone, hide behind our email, hide behind our texting, hide behind social media, and not meet face-to-face with our clients. I think our clients want that human contact. They want some connection with us that we care about them, and the technology tries to remove us from that. So I feel as a business owner that I strive to keep that contact via just a phone call that they can at least hear my voice. I encourage clients to come to my office. I know that there’s a push to get away from that…I encourage that. And maybe in this world using Skype, or using your web cams might be a way that you could keep that at least face-to-face contact with your clients. I think as a business owner that’s gonna be one of our biggest problems.

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