I’m doing a blog swap with Kristin over at Payment Free Life today. What that means is that I’m knocking the quality of her blog down a few notches while she classes things up over here for a day. Don’t worry, I’ll be back to destroying the fabric of America soon enough.
In the meantime, you can find me speaking about Money and Marriage over at her blog today. But it might surprise you to learn that I actually have been cheating on you since June 2013. That’s right. I’ve been writing about marriage over at my other blog, Confessions of a Terrible Husband for a year.
Curious yet? Check me out over at Payment Free Life today.
Now get prepared for some useful info for a change:
I hate paper. As a tax preparer and small business owner, I deal with lots of paper. I have receipts for my business, donation recipes, contracts, benefit paperwork, IRA and bank statements and other miscellaneous pieces of paper. This was the most recent stack on my desk.
Do you have a stack of paper like this on your workspace? Have you filled up your filling cabinets and are worried where the next batch of papers will go? Are you losing out on tax deductions because you can’t find your receipts?
It’s time to get rid of the paper
I’m not suggesting that you just shred everything and pray that the IRS does not come knocking on your door.
It’s time to go electronic.
The IRS does not require that you keep the original receipt. The only requirement is having a facsimile of the receipt. A facsimile could be a photocopy, photograph, scan or email confirmation. This allows you to make electronic copies of all of your receipts and get rid of all that paper that is cluttering up your workspace.
This might take a little time and possibly a little money to get started, but you can get started for free as long as you have access to a camera. Here are the steps to convert to a paperless work space.
- Sign up for electronic statements. I no longer receive any of my bills or statements in paper format. I get an email when the statement is ready. I can go online and download the statement but most of the companies I do business with save all my statements online for me. This cuts down on about 70% of the paper that previously came into my house.
- Create some digital folders. I have a folder on my computer called 2014. In that folder, I have folders for more specific items I need to track like home repairs, business expenses, and charitable contributions. Don’t go crazy with the folders. You’ll get frustrated with the system and stop using it. A miscellaneous folder is a good thing to have.
- Opt in for electronic receipts. Some stores, like Staples and Home Depot, have started offering electronic receipts. I love this option. By the time I get home, the receipt is already in my inbox. I print the receipt to a PDF or download the attached PDF and file it in the appropriate digital folder. This saves me the step of having to scan the receipt when I get home.
- Create digital copies of any remaining pieces of paper. Depending on how much scanning you do each month, you may want to get a scanner. I have a Fujitsu ScanSnap. This is a pretty beefy scanner but I use it to scan multipage client documents. If you just need to scan a few pages at a time, this scanner might work well for you.Both scanners use wifi and can save documents directly to Evernote, Dropbox and Google Drive. If you don’t have a scanner, take a picture of your receipts. This might be a pain for multipage documents, but for normal receipts this works well. Just make sure to check the picture to ensure the text is legible.
- Have a backup plan.This does not mean keeping the paper! This is the biggest concern for clients who want to convert to a paperless system. What happens if my computer crashes? My response is always “what happens if you have a fire or break in?” No matter what happens, I have an offsite backup of all my files. Make sure that all of your electronic files are backed up. You can use Evernote, Dropbox or Google Drive for free. You can also get an automatic backup service for your computer.
I first implemented this plan seven years ago when I started my business. This system saves me time, money, aggravation and space in my work space. I can easily file all of my receipts from my desk. I don’t have to purchase more file folders, file boxes and file cabinets. Whenever I need to find a receipt, I can easily find it in my electronic files. It makes my life so much easier.
Unfortunately, this system will not help free up space when very large cats decide to invade your work space.
Kristin Ingram is the owner of Kristin L. Ingram, CPA, a tax and consulting firm in Connecticut and a college instructor, teaching various accounting classes at a local university. You can find out more about her frugal adventures at www.PaymentFreeLife.com.