Tax season is upon us and companies and individuals alike are sharing in the preparation of filing taxes including finding and organizing supporting documentation for deductions and expenses. For some, the task of retrieving documents can be a task easily accomplished. For most, this can be a time consuming, almost insurmountable, event.
According to the IRS¹, there are five tips you should follow for individuals:
1. Normally, tax records should be kept for three years.
2. Some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer.
3. In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, however, you should keep any and all documents that may have an impact on your federal tax return.
4. Records you should keep include bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks, proofs of payment, and any other records to support deductions or credits you claim on your return.
5. For more information on what kinds of records to keep, see IRS Publication 552, Recordkeeping for Individuals, which is available on the IRS website at http://www.irs.gov or by calling 800-TAX-FORM (800-829-3676).
This list sounds easier than done and for individuals but imagine what it is like for businesses. Studies show that professionals spend more than 18 minutes locating each document². Now multiply times the number of documents could equal more than 21% lost in an organization’s productivity³!
By leveraging a document management system, filing taxes can be a less time consuming and stressful time of the year. Not only can you easily file supporting documentation, but it can be easily retrieved, backed up, and securely stored—with a mouse click or two.
RJ Young can show you how to make finding documents a little easier and tax time—less taxing.
Mark Turner – Director of Software Services
Mark is responsible for the software sales and implementation teams. He has worked for RJ Young since 2013. Combined he has over 16 years of experience in the industry where 9 years were in IT and 7 years were in software. Mark works out of our Nashville, TN office and is originally from Montgomery, Alabama. In his spare time he volunteers for the United Way and enjoys kayaking, photography and craft beer.
Here are some very interesting statistics when it comes to our paper documents and how they are handled.
- The average executive wastes six weeks annually searching for important documents lost in among the clutter. Wall Street Journal
- US employees waste more than two hours a week finding, sharing and storing documents. smartbusinessmag.com
- A full four-drawer file cabinet holds 18,000 pages. NAPO
- It costs about $25,000 to fill a four drawer filing cabinet and over $2,100 per year to maintain it. Gartner Group, Coopers & Lybrand, Ernst & Young
- The average office spends $20 in labor to file each document, $120 in labor searching for each misfiled document, loses one out of every 20 documents and spends 25 hours recreating each lost document. PricewaterhouseCoopers
With tax time just around the corner most individuals and companies are pulling all of their paper documents together to prepare their returns. Now is a perfect time to convert all of the paper into digital files and store them. Not only will this process make it easier when tax time rolls around, but you can also realize savings in file space and the time it takes to locate a document that is filed and indexed digitally.
If you have not planned ahead then you may find yourself looking for lost documents, which is a very inefficient way to spend your valuable time. Tax time is strenuous enough without having the added stress of a system that does not store and manage your files digitally. Many will ask when the best time to implement a document management system is. It appears the sooner the better because it will make the workload easier for everyone and result in increased efficiencies with lower costs.
Hunter McCarty – COO
Click here to view Hunter’s bio.