Axiom CPA, P.A. - Axiom CPA Blog

When I started my business I made a conscious decision to go paperless from day one. That's no small task for an accounting firm, but we've been pretty successful. We still have paper but it's limited to work in progress. Once a project is done we don't store any paper or hard copies. After nearly three years here's what I have learned about the benefits of going paperless.

It's safer. My business is on the gulf coast of Florida. Hurricanes are a major concern every summer. If we're about to get hammered by a storm all I have to do is unplug an external hard drive from my server and I have a complete, encrypted backup of all our client files and critical program files. If a storm really was bearing down I could just load up my trunk with all of our computers and the server. We could be up and running in another location within three or four hours and we would have all the supporting documentation for prior projects and all perm file documents at our disposal. That's just not possible with a traditional paper filing system. We also have more than one backup which eliminates the possibility of someone losing a file.

It's faster. Retrieving documents from your desktop is so much easier than walking to a file room or tracking down a file in an employee's office. One of the huge benefits for me is being able to take my laptop anywhere in the office and pull files while reviewing a matter with an employee. Gone are the days of passing perm files back and forth looking for loan documents or shuffling through last year's tax binder to find an amortization schedule. If I want a document I just double click on the file and pull it up on my laptop while the staff member continues to work on the project using the desktop machine.

It's more convenient. I get sick of working in the office. With our system we can dial in and remotely access any file on the server. This isn't hard and most offices with a dedicated file server will have this ability built-in. This time of year it's nice to take a long lunch, bring the laptop along and bang out a few pieces of correspondence from nice outdoor restaurant. I also have access to these files when I'm sitting in a client's office. No more audit bags stuffed with prior year tax binders.

All that said paperless only works if you do a few things right. Otherwise don't even bother.

Setup a standard filing system (folder structure) in a central place and make everyone religiously store ALL their documents on the file server. If everyone is maintaining their own little system or if they're making "working copies" to store on their individual machines it won't work. You need to be confident that your system is complete and current. The filing system should make sense. We have four primary places where information is stored: a) a client files directory on the server, b) a sharepoint site for internal documents, c) a sharepoint site for vendor documents and d) a "misc" directory on the server for everything else. Employees are told not to copy documents to their hard drive, EVER.

Setup a naming convention. I'm not a big fan of proprietary software packages that setup their own filing systems. I like the straightforward, hierarchical folder structure provided by windows. For instance, we have folder for each client number and subfolders for tax years, projects, etc. Using this system we can store any kind of file and no one needs special software to see what documents are in a file. But if you do it this way you really need a naming convention. This means EVERY file in your system will be named a certain way. Ours goes like this "xxxxx-yyyy-a-yymmdd-description.pdf" where xxxxx is the client's number, yyyy is the fiscal year the document relates to, yymmdd is the creation date in the format year month day, followed by short text to describe the document. A file named 10003-2006-a-080320-irs notice response.pdf is a response to an IRS notice received by client number 10003. It relates to the 2006 tax year and it was drafted on March 20, 2008. This simple naming convention gives you a lot of information about the file and it allows you to search for documents using any file system search tool.

Backup, backup, backup. I'm not trying to emphasize a point here. I'm saying you need three backups. We have redundant hard drives on our server, a nightly backup to an external hard drive, and synchronization software that copies files to a laptop. This is the only thing that makes paperless systems safer than hard copies. If you don't have backups you're flirting with disaster. You should also test your backups and make sure that they are encrypted. One of the nice things about a three hundred pound filing cabinet is that a thief can't put it under his arm and walk out the door with it. Not so with a two pound hard drive.

Invest in good equipment. I don't know that paperless systems are more expensive. When you factor in the additional rent to store paper documents and the lost productivity there's probably an argument that they're cheaper. However, you need to get good equipment. For us this includes more memory in computers, dual monitors for ALL employees, multi function printers that can scan documents on every desk and at least one high speed scanner for the entire office. Dual monitors and the high speed scanner are the most important. Don't think about going paperless unless you're willing to give everyone two screens. Once you do they'll treat you like a god and you'll never even consider going back. The high speed scanner is pricey (ours cost $1,300) but if I would have known how much time it was going to save us I would have bought it on day one.

Done right I don't think there's a better way to run an office. Most industries are moving this direction or are already there. In addition to the things discussed there are a lot of other benefits such as improved business processes that we haven't talked about. If you're considering going paperless give it a try in one office or one department. We learned a lot in our first year and made significant changes along the way. If you have a small office you can probably implement paperless systems all at once. It's not as hard as you think.