Paper Copy or PDF?

[Yardley CPA]

What do you keep in your file, a paper copy of your clients return or do you save a pdf version or maybe both? I've always kept a paper copy of the return along with any back-up information such as W2's, 1099's, etc (my filing cabinet is starting to burst at the seams). I find it would be too time consuming to scan all the back-up, but I'll admit, I haven't really looked into any scanning solutions and I'm sure there are packages out there that provide an easy means of accomplishing that. Just wondering what each of you does?

[Randall]

I started with 2005 keeping only pdf copies of returns, client info, etc. Like you, I had full files, boxes at the office and boxes at home. I began scanning them in a little at at time. I did it myself, took a lot of time, but saved money. Got all the boxes done, still had the filing cabinets full. In November, downsized office space, began scanning the remaining files in the cabinets. Couldn't get it all done by busy season, still have some boxes left. Smaller office, more efficient, saving rent money too.

For backup, cross your fingers. Just kidding. Have two internal HDs, two external HDs, rotating office and home offsite. Encrypted.

[Catherine]

I've been keeping pdf's -and- paper copies of client returns, plus pdf's of original doc's (3 years of paper in active file cabinet). This year so far I've just been keeping pdf's. I may print out the 1040 only; still thinking. The thing about paper is that if a client calls next September with a question, it's a lot faster to pull out those paper files (especially multiple years) than to wait until the computer boots and/or Adobe Reader loads. (Funny how they always seem to call when the computer is -off-.)

But I could sure use the extra file space of no paper copies. Plus MA is now instituting absolutely ridiculous rules about client data; some of the one-size-fits-none types that apply equally to huge companies like TJX, and out-of-my-house sole prop's like me. You're not supposed to leave ONE piece of paper out, unlocked, if you go to the bathroom! Or have -any- client file out except the one you are actively working on right that very second. Yeah, right.

KC has mentioned the list of info we absolutely need to keep -- maybe I'll eventually dig that list out and print just those bits.

[elfling]

Our file cabinets once overflowed with paper documents, too. We have not kept a paper version of returns in many years. Usually the only things in our folders/cabinets are signed 8879s/8453s, copies of some stock purchase docs from years past, the occassional tidbit that did not scan well, etc. We write many notes on the inside cover of the file folders. It had crossed our minds to go totally paperless, but I'm not fully comfortable with that just yet. (My younger partner says it's an age-thing. ) Having a folder for each client helps keep me organized day-to-day.

We scan all pieces that would be needed to rebuild a return should it be lost, scanning with a Canon MF Toolbox application that is extremely quick, seconds for most returns. We back up all scanned documents and returns to multiple media, usually flash drive and zip drive during peak, eventually burning a CD late in the year.

Elfling

[Catherine]

<snip>

We scan all pieces that would be needed to rebuild a return should it be lost, scanning with a Canon MF Toolbox application that is extremely quick, seconds for most returns. We back up all scanned documents and returns to multiple media, usually flash drive and zip drive during peak, eventually burning a CD late in the year.

Elfling

I have dual hard drives set with a RAID mirror system, daily online secure backup, weekly (well, I try) onsite backup to external network drive, then I burn CD's or DVD's at season end that go off to a safe box. Belt, suspenders, duct tape, and staples ALL needed when computers are involved!

[TAXMAN]

Hey KC if you read this could you republish that list. Might be something we all could use. Thanks

[Lion EA]

Had too much paper and was going to try CCH's Scan & Flow next tax season, but salesman made me a deal for this year's price for this season AND next before renewal fees set in, essentially cutting the price in half, even more with multi-product discounts, etc. So, I bought it and squeezed in training before I got busy and bought the ScanSnap and a new monitor and got referrals for a local techie and them boom 20 clients dropped off. So, not using the full system yet, but maybe before I get to the really paper intense returns. I am printing to PDF my file copies of the returns, though. Big space saver, paper & toner saver, time saver. So far, I've been putting client notes, copies of documents w/WH, and other paper I want to keep in client's folder in file cabinet. When I network in my new scanner, I'll probably use my very part-time assistant to scan those items into the nice bookmarked, labeled PDF file for each client. Or, start that NEXT season. I do keep the Forms 8879 with attached W-2s, etc., on paper in a folder; that only grows to about two file folders per year.

[Lion EA]

And, since I haven't networked in my new equipment (bought a used computer from the techie to use as the Scan administrator) such as the second monitor, I don't know how I'm going to feel -- like Catherine -- about having to be at computer and open a PDF to refer to return with client on the phone, or next year working on their next return and referring to 2009 on-screen instead of flipping through the paper. I did have one client call re their completed 2009 return and had to load it; question had to do with duplicating a 1099-R as a dividend, so scrolling to Schedule B and to worksheet listing all the 1099-Rs. Guess it was OK, but automatically dug into my file cabinets before I remembered where 2009 returns are now!

I have an external drive that I backup automatically nightly and other times as I want to. I have auto backup going up to VMSUS at 3 a.m. every night. I put returns on alternating flash drives when I think of it and daily or even more often now that I'm getting more entered. I have a flash with 2008 that I meant to put in my safe deposit box. Do you recommend a CD instead for long-term storage?

I've been reading about MA rules as I have a MA trust, a MA joint personal return, and a bunch of non-filed years of a MA corporation. The emailing rule is the main issue for me here in CT. The clients have been used to emailing me. But, I need to get them used to picking up info FROM me on the FileShare on my web site. I think that works within the MA rules, yes Catherine?

Gotta get my driveway and walks cleared before clients arrive!

[Kea]

I've been printing the files to .pdf for a couple of years. Did that so I could paper print just the pages I wanted, in the order I wanted and duplex it. (Not all tax software is as friendly as ATX for printing what you want.) With my safe busting at the seems and the desire to spend more time traveling in the RV, it was time to scan all the old files. I know I don't have to keep the old stuff, but I'm paranoid and like having the history available. So now that my spouse has become by co-owner (health insurance reasons), I put him to work scanning my old files. I have a small practice that goes back to 1998. Working on it on and off, it probably took him about a month to scan everything. I've reviewed the 1998 - 2000 files and shredded the paper copies. That gave me the room to put 2009 in the safe. After the season, I'll review and shred up to 2007. I will probably always keep 1 - 2 years in paper, because I use that for the current year. I'm more comfortable looking at the paper copy while I do the current stuff on the computer.

Now I just need a better backup system. I've reorganized my computer folders by client first, then year. So I don't have an easy way to backup just the most recent changes. And when my husband scans the current documents they go to his computer. He's using syncing software to keep them the same. It works OK to the (shared) external hard drive, but is unbearably slow to the flash drive.

He also tried to encrypt the backups, but it was also too slow. It took forever to open. I need to explore this as well. It's too important to have files encrypted, but it also has to be where you can still access the files in a timely fashion.

And every file that is "pending" is on my desk -- not locked up. I guess I'm glad I'm not in MA. It's a habit I should break, though.

Good luck with your research. I'm interested to see what methods others use.

[OldJack]

I have paper copies since 1973 for clients that are still clients. When no longer a client I destroy all copies after 10 years and record the date in a log. In the late 1980's I started also keeping tax returns on floppy disc. I now have 3 computers but no floppy disc drive to read the floppies. I now have pdf files on standard DVDs and wondering how long before I have to convert to Blue-Ray DVD format. My new computer has Blue-Ray. Computer storage is truly a temporary solution. Paper will last as long as I will and after that I could not give a damn.

[Catherine]

<snip>

I have an external drive that I backup automatically nightly and other times as I want to. I have auto backup going up to VMSUS at 3 a.m. every night. I put returns on alternating flash drives when I think of it and daily or even more often now that I'm getting more entered. I have a flash with 2008 that I meant to put in my safe deposit box. Do you recommend a CD instead for long-term storage?

I've been reading about MA rules as I have a MA trust, a MA joint personal return, and a bunch of non-filed years of a MA corporation. The emailing rule is the main issue for me here in CT. The clients have been used to emailing me. But, I need to get them used to picking up info FROM me on the FileShare on my web site. I think that works within the MA rules, yes Catherine?

Gotta get my driveway and walks cleared before clients arrive!

I strongly recommend AGAINST using Flash drives as long-term storage; they fail WITHOUT WARNING. I know a number of people who have been burned that way.

Yes, the File Share works within the MA rules. But I am amazed at the clients who pay no attention when I tell them "do NOT send me SSN's, bank account numbers, (blah blah) by email". Supplemental info -- no problem. Just nothing an identity thief could use.

And OldJack -- I agree with you in theory on the paper files. I just don't have the physical room -- and with the new regulations, I sure don't have the -secured- storage to keep paper returns for everyone for the length of time I'd want to keep them.

Catherine

[Lion EA]

Thanx, Catherine. Probably not 'til after tax season, but I'll burn 2008 and 2009 to CDs and put in my safe deposit box. For the time being, I have the internal hard drive, external, flash, and VMS backup.

My ex worked for GE with many government contracts, so NASA or whichever agency insisted he have a lock on his office door, which GE installed. However, due to his low status in the GE pecking order, he had only 3/4 high cubicle walls. What good was a lock on his door?! But, our government was satisfied. That's what the new MA rules remind me of. I love your one-size-fits-none description, Catherine.

I work at home and had new locks installed since I hadn't done that since my prior marriage and the door between the garage and basement had no lock, etc. I had a different deadbolt installed on my home office door, and the key hangs in the lock on the open door. It's mostly so my clients feel safer. I seldom lock it as it makes the hallway from my front door into the office too dark. And, I have a spare key in the linen closet next to my office in case my husband ever has to rescue me (fall, heart attack, irate client, whatever). So, anyone could get in if they really wanted to, but it looks safer than before. In the meantime, clients just leave their private stuff on my front porch, so weren't too worried about safety and privacy! I've now installed a large mail slot in my front door.

[Catherine]

I have a mail slot in my front door -- but people put stuff between the screen and back doors! I did re-key the "office" door -- but the door has glass panes. The office is in my house, and if I'm not here the (monitored) alarm system is on. No cleaners (and boy can you tell long about the end of March!), no service people at all in here without me being here. VMSUS described our computer and network security as "Fort Knox". My daughter is my employee, and my husband has a security clearance. We're about as safe here as one can get in terms of information. And all this (except the key to the glass door inside the house) well before the nonsensical law.

OK, it's late and I'm tired. Enough for tonight.

Catherine

[michaelmars]

I Agree with Old Jack and love paper for as long as i have the client but storage space is costly. i have been pdf'g everthing for a few years now. In NY we are requred to keep records for 7 years [paper or digital] So i am keeping 7 yrs of paper and the rest on digital. On a client by client bases and mostly for businesses i keep paper forever-as long as i have the client.

[GeneInAlabama]

I don't have enough confidence that those little electrons can remember where they are supposed to be, so I have a paper copy of EVERYTHING for the last ten years. I may drown in paperwork but I do feel confident right now.

[carolynm]

I've been all .pdf since 2007 - I love it. No paper for me. It's the green thing to do! And...I am much better at organizing computer files than paper files. I can pull up .pdf much faster than locating paper - especially if it is an older document.

I don't trust the "electrons in my head" to file paper documents properly...lol..the other day I had a client document on my desk...went to input it and couldn't find it to save my life. I had to think whose papers I had out before I worked on that client and sure enough it was with those papers. Now if I had just scanned and .pdf'd it when it came in I wouldn't have had to go searching.

I also deliver most of my clients .pdf copies rather than paper copies.

CArolyn

[Jake]

I started scanning a couple of years ago. This year we are scanning almost everything that comes into the office. We use the Document Manager program from ATX. It is not perfect but I certainly wouldn't go back to the old filing system.

[OldJack]

I started scanning a couple of years ago. This year we are scanning almost everything that comes into the office. We use the Document Manager program from ATX. It is not perfect but I certainly wouldn't go back to the old filing system.

Well... I should have pointed out that my CPA practice gathers a lot of workpapers and copies that don't come from my computer so I have paper files unless I would take the time to scan all those detail documents. I have had many occasions where old workpapers were very valuable to a client. My practice is mostly corporate and business and I only do personal returns for my business clients. I can understand the paperless office concept for a purely personal income tax practice.

[Randall]

Well... I should have pointed out that my CPA practice gathers a lot of workpapers and copies that don't come from my computer so I have paper files unless I would take the time to scan all those detail documents. I have had many occasions where old workpapers were very valuable to a client. My practice is mostly corporate and business and I only do personal returns for my business clients. I can understand the paperless office concept for a purely personal income tax practice.

I did just that. It took time and it was a slow process. You probably have more volume than I had. But I too like to keep those worksheets. All the more beneficial to just access that with a couple of clicks. When a client calls, I can be clicking while he's still asking his question. Many times, I can be looking at what I need to see almost by the time he's finished asking his questions. I would start with the current year and avoid adding to the paper pile. Then gradually work on the back years.

It's a little scary at first to not have that crutch of paper in the file or boxes.

[OldJack]

I did just that. It took time and it was a slow process.

Converting to a paperless office should include the long term benefit as it does in your case Randall. A few years ago when I considered scanning all papers, scanners were slow and time was running out with just a few years for me to retire. I will be retiring at the end of this tax season, so no need to start something I will not benefit from.

We all acknowledge that the main problem with paper is storage. The main problem with storage is not having a proper destruction method or program. Remember the old slogan, "the job is not done until the paperwork is done". In our business the paperwork is not done until is has been destroyed. Mine was not a large practice with only a few employees, but auditing along with tax work created lots of paper over the 37 years. With my good yearly destruction program, the resulting papers are in current used file cabinet storage space that would fit in most of your offices. Yet, with at least a couple of clients, I still have a few records that are more than 20 years old.

[Randall]

Converting to a paperless office should include the long term benefit as it does in your case Randall. A few years ago when I considered scanning all papers, scanners were slow and time was running out with just a few years for me to retire. I will be retiring at the end of this tax season, so no need to start something I will not benefit from.

We all acknowledge that the main problem with paper is storage. The main problem with storage is not having a proper destruction method or program. Remember the old slogan, "the job is not done until the paperwork is done". In our business the paperwork is not done until is has been destroyed. Mine was not a large practice with only a few employees, but auditing along with tax work created lots of paper over the 37 years. With my good yearly destruction program, the resulting papers are in current used file cabinet storage space that would fit in most of your offices. Yet, with at least a couple of clients, I still have a few records that are more than 20 years old.

Congratulations on retirement. I agree, let the shredding begin. Enjoy your retirement.

[artp]

I have a small (mostly tax only) practice so I may not be typical, but I went to virtually paper free this year just using a Kodak i1120 scanner and Adobe Standard. I looked at Document Manager, but it was too expensive and did not really save much time. I just needed simple document storage system rather the a complex document sorting and retrival system. I post any notes directly on the client docs before scanning and add electronic notes as needed afterward. So far works get. My client folders just consist of signature forms and the occassional odd document. I backup daily to separte external hard drive. Just my two cents worth.

What do you keep in your file, a paper copy of your clients return or do you save a pdf version or maybe both? I've always kept a paper copy of the return along with any back-up information such as W2's, 1099's, etc (my filing cabinet is starting to burst at the seams). I find it would be too time consuming to scan all the back-up, but I'll admit, I haven't really looked into any scanning solutions and I'm sure there are packages out there that provide an easy means of accomplishing that. Just wondering what each of you does?

[joelgilb]

Been keeping PDF copies only since 2004. Only Have 2 file cabinets left at this point and as soon as they can be shredded they will be empty except for current WIP