Tax Pro Forum: Tips and Tricks for a Paperless Practice

With the recent advance of cloud technology, many tax practitioners and accountants have decided to run paperless practices. I talked to several pros with paperless practices of their own to share their learnings, in order to help you refine your own paperless practice, or decide if it is the right path for you and your practice in the future. First, let’s meet the experts:

Bruce Andersen, CPA, is the owner of Andersen CPA, a full-service accounting practice, and a principal at BTA Consulting and Training. He specializes in small business tax and support. He has been in practice for about 30 years and went paperless in 2010. Andersen has a Master of Business Administration and a Master in Taxation. He is a Certified QuickBooks ProAdvisor® and a member of the Intuit® Trainer/Writer Network.

Dawn Brolin, CPA, is managing member of Powerful Accounting, LLC, an accounting, tax and QuickBooks consulting firm that has been paperless since 2011. Brolin is a Certified QuickBooks ProAdvisor and a member of the Intuit Trainer/Writer Network. She was named one of the top 25 most powerful women in accounting by CPA Practice Advisor for the past four years.

Bonnie L. Mackey, CPA, is vice president at Levin, Silvey, Zelko & Mackey, PA, a tax and accounting firm that has been paperless since 2010. She is a Certified Specialist in Estate Planning, has a Master of Business Administration, and is a Certified QuickBooks ProAdvisor and a member of the Intuit Trainer/Writer Network.

Dave Venard, EA, is president of Bayview Services Group, which has evolved from a brick and mortar practice to a virtual, paperless practice over the past three years. With more than 32 years of experience, Venard offers bookkeeping and accounting, payroll and tax services, with a focus on servicing small- to medium-sized businesses and individuals. Venard is a Certified QuickBooks ProAdvisor and a member of the Intuit Trainer/Writer Network.

The Benefits of Going Paperless

The benefits of going paperless are many, and our pros had a broad range of reasons why they decided it was the right choice for their practice. Dawn Brolin, for example, didn’t want to be tied down to one location. With two office locations, as well as a family, Brolin wanted the flexibility to prepare taxes from anywhere. “With a paperless practice, taxes are prepared faster and cheaper,” said Brolin.

With a large practice, Bonnie L. Mackey’s practice went paperless to try to eliminate off-site storage and have real-time access to paper files. As a result, her practice has reduced paper consumption, cost and the time it takes to access client files.

Dave Venard, on the other hand, wanted to have a completely virtual practice. He worked in New York and Hawaii for several years, and believed a virtual practice was necessary if he wanted to avoid carting paperwork back and forth. Venard said that his practice has been “better, faster and less expensive,” since he began his journey as a virtual practice.

Bruce Andersen noted how important paperless, cloud-based practices can be for mobile employees and executives, who are often on the go. As a consultant, he also feels it’s important to be on the forefront of the industry.

Tools of the Trade

The tools paperless pros use offer as much variety as the reasons for going paperless, and depend somewhat on where they are on their paperless journey. For example, many practices have clients who would still prefer to drop off paper instead of sending files electronically. For these practices, scanners and scanning apps are important to convert paper files to electronic files. In addition to traditional scanners, Brolin uses the Fujitsu ScanSnap Connect mobile app to scan documents on the go and get them quickly into the SmartVault document storage solution; she also uses the NeatReceipts portable scanner specifically for quickly digitizing receipts.

On the other hand, our pros have many clients who want to send files electronically. Mackey has clients who prefer to email files as well, and she uses Citrix ShareFile to enable secure email with her clients. Venard and his clients also use Intuit Link and DropBox to share files electronically. Several of the pros, including Venard, also have some clients who use QuickBooks® Online (QBO), and they use the file-sharing capabilities within the software. Venard, in turn, appreciates that QBO can send data directly to Intuit ProConnect™ Tax Online, which can import data from ADP and financial institutions, allowing him to quickly and paperlessly go from books to tax.

Venard also uses the cloud to connect to the IRS. “I use Audit Detective to download IRS transcripts,” he said. “When I have power of attorney and want to get a transcript from the IRS, I can get online and download the whole IRS transcript to a computer.”

Our pros also discussed how hardware has an impact on their paperless practices. In addition to the physical scanners in her office, Mackey mentioned having multiple monitors to manage all of the digital files and software programs she has open. “I now have three monitors. I have tax returns open on one, my document management system open in another and a third monitor for review notes.” Mackey and Venard both focused on the importance of backing up and data redundancy to ensure data is available and secure. Andersen adds, “It’s important to standardize components of your system so that you can have continuity among the system for all of your work.”

The Challenges of Going Paperless

One challenge that each of the four pros discussed was their digital filing structure. “The biggest piece of going paperless is to develop the process for how you do file recall: What’s the way in which you retrieve documents so that you can retrieve them quickly?” Andersen said. Brolin notes that it’s important to think through the logic of your filing structure and to get staff aligned before going paperless, or else it will be a heavy lift to repair later on. Several of our pros did end up changing their structure along the way, and they now have a standard protocol they use to label files so that they can easily find them later. Andersen recommends organizing files by year, client, type of return and type of file. In addition, Mackey uses a quarterly filing system for certain clients, and she uses an “open read me” file of notes that need to be addressed for clients for the current year.

A second challenge that all four pros discussed was that it’s difficult to go 100 percent paperless. In fact, Mackey uses the term “less paper,” instead, because of these obstacles. For example, Mackey says that her firm still uses a color-coded paper system to track routing of documents. “We have a routing piece of paper that goes around the office so we can easily track what has been done and who has current responsibility over a tax return.” She is currently considering how to digitize this process. Some functions, including payroll tax work, are also more prone to having a bit of paper involved, according to Andersen. Venard adds, “One challenge is the IRS. They are a paper-and-mail organization – all of their notices come on paper. I take them and scan them into client files.” However, the pros shred most of the paper documents they receive once they are digital, so there is little paper clutter in the office. “I have a filing cabinet in my office, and all it holds T-shirts!” said Brolin.

Another challenge with going completely paperless may be client resistance. While none of our four featured pros force all of their clients to go paperless, especially clients they have long-term relationships with, they are upfront about their paperless practices so that they attract the right kind of new clients. Venard noted that not all clients are interested in working with a paperless pro; some reasons may be that the client perceives it’s extra work for them, or that it isn’t as secure as a paper practice. As a result, Venard has done some work educating his clients to help them understand the efficiency and security a paperless practice can bring. Brolin adds that one of her biggest challenges is getting clients to embrace uploading to SmartVault, instead of dropping off paper copies. “SmartVault is a secure and easy way to send sensitive information, and I help the clients understand that documents are stored and secured,” she said. According to Venard and Brolin, it’s common for some clients to ask for a tax packet at the end of season, and while they try to discourage this, they will mail a few long-time clients hardcopies.

Staff resistance is a final common challenge at paperless practices. “At the beginning, there was partner resistance to not printing out tax returns,” said Mackey. “Even new staff may struggle with the new environment and workflow – it depends on the environment they came from.”

Conclusion

After talking with our four paperless experts, it’s clear that since it’s difficult to completely eliminate paper from your practice, going paperless is a journey that doesn’t happen overnight. Years after beginning to go paperless, all of our pros are still looking for ways to eliminate more paper, and finding more efficiencies in their processes. In addition, it’s clear that one model isn’t right for everyone, but there are lots of tools and tricks you can implement to help find a model that is right for your firm. Best of luck in your own potential paperless practices!

If you have any tips or tricks to add to the ones our pros shared, we’d love to hear from you! Please leave a comment below.