Small business owners & record keeping - You CAN go paperless!
Many small businesses generate a lot of records ... bills, checks, estimates, receipts for business expenses, invoices, reports and on and on and on... This week I heard from a few small business owners who felt themselves drowning in a sea of paper clutter, but were scared to let go of anything lest the IRS might demand a paper copy of some ancient receipt. Several home based businesses actually claimed that their accountants forbid any electronic records and required all years to be kept in paper indefinitely. While it is prudent to occasionally keep a few critical originals, (say, the last few years tax returns, important signature-based contracts) everything else can be scanned, stored electronically & shredded, so long as a few simple rules are kept.
Small businesses may want to invest in a high-speed, ADF (automatic document feeder) scanner. (In my experience the all-in-ones and single-sheet feeders are far too slow and unreliable to use on a regular basis). A personal favorite is the Fujitsu Scan Snap - load a stack of papers onto the ADF, press a single button and zoom! it pulls a good 10-20 pages/minute and the included software stores in searchable pdfs. However, given the chance of pc's to "crash" or have accidental deletions, a backup of the files should be burned onto CD or other removable media. (keep the back-ups in a small fireproof, waterproof safe)
To sum it up, while the IRS does require certain basic record keeping requirements, small business owners are not forced to drown in paper clutter. There is a lot of misinformation, but the following DIRECT quote from IRS publication clarifies the position on scanned
records should clarify for those hesitant to let go of the paper:
------
"Electronic Storage System
Records maintained in an electronic storage system are accepted for
recordkeeping purposes if the system complies with Revenue Procedure
97-22 in Cumulative Bulletin 1997-1.
An electronic storage system is one that either images hardcopy
(paper) books and records or transfers computerized books and records
to an electronic storage media, such as an optical disk."
-----
Check out the IRS rules yourself at www.irs.gov, but please don't let the assumption that you must have paper of everything scare you into
keeping needless paper clutter! In sum, a business owner must keep complete records, but legible digital images are perfectly acceptable. (See
earlier post about back-up electronic records) Per procedure 97-22, you must make sure the scanned documents are legible and indexed, but
you can shred the originals and go paperless! So, go ahead and keep all your records- just keep them on your harddrive & duplicate copies
on a few disks stored in a safe. Get rid of those boxes and piles allover the place!!
Feel free to check out IRS a link to the detailed requirements at www.recapinc.com/irs_97-22.htm and the IRS publication 583 at www.irs.gov
THANKS SO MUCH GOING GREEN IS THE KEY TO OUR FUTURE- GREAT BLOG- IF YOU HAVE ANY QUESTIONS ABOUT IMMIGRATION CHECK OUT THESE SITES
http://www.usaimmigration-attorney.com/
Reply to this