How to Keep Records Well for Your CPA

“Paperwork, paperwork!”, you might say with frustration from time to time. Keeping up with records can be a challenge, but it’s an inescapable necessity if you run a business or want to enjoy certain tax benefits. Every piece of paper that shows proof of income, an expense, or a business transaction can help to substantiate statements made on your tax return, insurance claims, and regarding your property. As long as your records are organized, you should keep all of the documentation, invoices, receipts and financial statements that you have because you never know when might need them, especially if you are hit with the “Big A” – an audit.


Speaking of being organized, many wonder if there are good alternatives to the classic manila folder and envelope method. I am happy to tell you that there are several affordable options to keeping records efficiently and available for quick access while greatly reducing the amount of paper that you must keep.  The paperless office concept that has already been adopted by forward-thinking companies and medical offices can help you too. Here are three ideas for you:


1. Document Imaging – Scan all of your documents and save them on your computer as PDF or other digital files. Name each specific document individually so that you can tell them all apart. Include the main subject of each item that you scan along with the date, such as “OfficeMax_Printer_051013” or “Employee_Tax_Q2_2013.”


Scanners are included in three-in-one printer/copier/fax machines and can also be purchased separately. There are also portable scanners that are designed to fit receipts of all sizes. Scanner prices range from less than $100 up to $900, depending upon quality and speed.  


Don’t forget to check the back of two-sided forms so that you don’t miss anything.


2. Hard Drive Backup  – Be sure that you save all of your scanned documents on an external drive in case something happens to your computer. Flash drives are inexpensive and convenient, just keep them in a safe place because they’re small.


3. Cloud Drive – Secure online sites store your files and allow you to share them with others as well as access them instantly for printing. You can access your records from any computer, smartphone or device with internet access. Companies like Microsoft, Google, Apple, Amazon and Dropbox lead the pack of many offering this service. Some of them are free.


After you’ve saved all of the electronic files and backed them up, you can shred the originals and enjoy more space in your office. A word of advice:  Never shred legal documents such as a birth certificate or title deed, of course.


Here’s hoping that this year’s record-keeping is neat and clutter-free. If it is, your CPA will love you for it!


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